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NVDA is underperforming QQQ today.
Hi Sam,
You mention
But, the hourly QQQ graph right below this shows us hitting 70 RSI before continuing to sell-off. Is 70 RSI not “oversold”? What is your RSI threshold for being “oversold”? Does it change based on the time frame (i.e. hourly vs. daily)?
Thanks!
So we did see the QQQ barely reach overbought territory on the first bounce. It did reach mildly overbought and the QQQ immediately paid for it.
But that is a rare outcome. That occurred between march 24 and April 1.
And if you look at each subsequent rally attempt, the RSI fell well short of overbought.
What we don’t see for sure is a surge through 70 up to an 80-RSI. Generally speaking, the hourly doesn’t push to overbought during correction or if it does like you saw on that one single rebound, it’s rare and short lived.
Note the difference between the two periods I have outlined in this chart I’ve attached here. Even as the QQQ was in its sideways topping process, it still regularly pushed into deeply overbought territory. We’ve seen that happen zero times in the correction. What’s more, the QQQ rarely even visits the area north of a 60-RSI. What we want to see as indication that the market is back to rally mode is repeated entires into the 80-RSI area again. That’s an indication that we’re in a multi-week or multi-month rally and that things have shifted to the buy side.
Sam, what’s on your mind? Does todays rally change the near term outlook and make another drop to $430 and below more unlikely?
I assume this leg is also going to be much shorter in duration than the others?
So near-term, we don’t have strong evidence one way or the other.
Intermediate-temr, we know form the weekly chart that we’re due for a large rally.
Near-term, the QQQ is neither overbought, nor oversold. It reached mildly oversold conditions and rebounded today.
It’s now at the mid-line on the hourly RSI, so harder to say what follows.
But this leg down from $467 overall, it’s on the weaker side of the spectrum as you can already tell. The bulls are fighting back in a manner of speaking.
It’s not like legs 1 & 2 which was all one sided. There were no 2.41% random up days mid-trend.
In the case there is secular change in the market, as we see people rotating out of US equities and even weak demand on treasuries, could this make your technical analysis way off?
So there’s nothing not already reflected in the technicals here yeah? It’s all built into it. If people were really “rotating out of US equities,” then how can the QQQ claw back 67 points of its 73-points drop post liberation day. Think about that.
So you make an assumption that people are rotating out of US equities en masse. Some people might and some funds may have indicated that they’ve move out. There might even be fund flows that indicate this.
But the indices as a whole show what EVERYONE as a whole is doing. Not just hedge funds, or mutual funds or foreign investors.
All of it, news, asset class rotation, market sentiment is all built into the technicals.
You can’t have the QQQ rallying from $402 up to $467 on absolutely MASSIVE volume unless people are buying en masse right?
Think about the assumptions you’re making and consider whether what the market is telling you directly in the market’s actual technicals itself aligns with your conclusions.
I get what you mean Sam, or at least I assume so. And I also think that it looks a lot worse than it is or will be in a few months.
But the MSCI World ex US is up 3% this year, DAX is up 6%, EuroStoxx 2%, Gold is at record high, Dollar at multiyear low and bond yields sharply higher while germanys bond yields actually declined.
Meanwhile S&P and NASDAQ are down 10 and 13% ytd. I mean that does mean that at least for now more capital is flowing out than in?
Of course it might flow back in just as quick, wouldn’t be surprised.
Sam, Some of these rallies seem to be partly based on news. These two stories came out today. Here is one:https://www.msn.com/en-us/news/world/trump-s-surprise-announcement-regarding-tariffs-imposed-on-china/ar-AA1DmRse?ocid=msedgntp&pc=DCTS&cvid=de0e7ffd5c244401918960f479b2f029&ei=13
And here is another: https://www.msn.com/en-us/money/markets/bessent-says-u-s-china-trade-embargo-to-end-in-the-very-near-future/ar-AA1Dp9uD?ocid=msedgntp&pc=DCTS&cvid=923181c0f9b447ff89eab677ae46de5c&ei=33
But the truth is that there it’s doubtful there will be any major trade deals done with China for at least a month or so. So I’m wondering if the markets will drop when they realize that a deal is still at least a month or two away.
The more I think about it, I’m surprised the market isn’t up more on those comments.
So there will be news somewhere everyday and someone will try and connect that news to what the market is doing.
But the futures were pretty deep green pretty much after the market closed yesterday and they ramped up all evening before these news pieces arrived.
It’s very easy to try and connect those two things when they might be entirely unrelated.
Let me give you an example. Suppose a big hedge fund decides it’s buy a shit ton of Apple today. S o much so that their actions actually cause the stock to move higher. The create outsized demand for the stock.
At the same time some mild positive news comes out on apple.
People can very easily attribute Apple’s rise to the news knowing nothing about the intentions of the buyers of the stocks. They may be buying apple for entirely unrelated reasons.
That holds true with the market.
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What’s more, the trend itself has already indicated a weakness in the 3rd leg down selling pressure. We forecasted that yesterday and in the days leading into yesterday’s pull-back.
Sam Has Nvidia’s outlook changed? It’s barely up today when the QQQ and lots of other things are up a lot?
No, not at all. The video is still working through the whole China nonsense. Which means it might underperform during some big days like today.
However, if the market starts a rally, Nvidia is not going underperform for long .
The only reason Nvidia is down here at all is because of the market.
If the market begins a major rally over the next several weeks, Nvidia is going to be rallying with it.
In today’s weekly chart titled “QQQ Weekly Points to Higher Weeks Ahead”, for 2018 and 2020 the QQQ rallied back to its ATH in 2-3 months.
Considering that this correction is closer to the COVID correction in terms of sell-off length, and looking at how the projection you drew for 2025 does not reach ATH while also considering how tariffs will be in the rear view mirror in a few more weeks, what sort of risks do you see where ATH is not reached in 2-3 months (pretty much the length of the 90-day tariff pause)?
The 2022 correction also rallied a sizable amount after reaching oversold on the weekly without reaching ATH which points as to why you mention the aftermath of the soon anticipated multi-week rally to be a separate issue. So, we would need to see where the rally will bring us in ~2-3 months whether it follows the 2020 route or the 2022 path.
Considering the length of the consolidation period (~Nov 2024 to Feb 2025) prior to the 2025 correction failing to make significant highs, in your opinion, how important of a factor or complement was this consolidation period for how the correction has so far unfolded?
Consolidation periods are not great. As we outlined in our later, post today, a consolidation period is always going to be a big risk factor for the market.
Sometimes a long consolidation can lead to a huge bear market and other times it’s meaningless.
We had a similar consolidation in 2015 that led to nothing.
It raises the bar for a potential bear market, but doesn’t necessarily lead to one.
One thing I didn’t mention in my post above is that any time you have a nearly identical looking chart is when the market flip it on its head.
Especially when the two charts happening close succession
So the 2025 chart looks nearly identical to 2022 in virtually every way
There is literally no difference at all. In both cases, we had huge rallies going into the top.
In both cases, we had a consolidation top
In both cases, we had a brutal first leg down.
The two cases look identical. The fact that it’s happening back to back actually hurts the chances that it’s going to play out the same way.
Anytime you have an identical set up like that and close succession. The market is going to totally screw with people.
They are going to be a lot of technicians and a lot of retail investors who are smart enough to point this out and they’re gonna think that it’s gonna play out the same way and it’s not
Whatever happens 2025 will not play the same way.
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To answer other parts of your question, we can’t really extrapolate anything at all about what’s going to happen after the rebound until we see the actual rebound itself
For example, let’s say Trump 100% reverse course on tariffs completely.
Slowly, but surely he pulls back and we no longer have tariffs as an issue anymore
That means the very concern that led to this major correction has been alleviated
The market can go back to focusing on normal things
If that happens, we will probably rally back to the highest fairly quickly
And not only that I would expect to see a 2020 style rally that takes us up to like 600 on the QQQ
Because think about why the market is even down to begin with
Part of it is due to normal retracement action needed after a massive rally like we had in 2023, 2024.
Part of it is due to Trump tariffs
We’ve already had the major retracement correction of 25%
If the tariffs are no longer an issue, then that’s that
We could also see Trump heavily pull back on tariffs and the market simply no longer care about tariffs at all
So while tariffs might still be an issue, it’s possible that the market is no longer gives a crap about it
And in that case, we could see a 2020 style recovery
Just like Covid issues continued for years after 2020. The market didn’t give care anymore and rallied anyway
Whatever the case might be, we won’t know until we actually see the rally
So NVDA is shooting up after hours? Did something come out with Tesla? Or is it Trumps comments about being nice to China and them having 18 trade agreements under review with another 34 countries they are meeting with this week.
I know typically its not actual news, but it shooting up after hours like this doesn’t sound market related.
Yeah…it is seems like most of stock movements occur after hours…
I always thought “there must be some news that makes the market behave this way”. Sometimes it’s true, for example the large rebound lately when Trump pause tariff. But after going through fundamental with Sam, I leave those thought behind.
You either one-night-stand with the market, or build a long term relationship with it. Everyone knows the risk for both.
Do you have recommendations regarding after hours moves? They often are large in both directions. It is a good idea to start buying after hours too?