Samwise Quick Reference Handbook
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Hey Sam, PLTR is down about 20% since yesterday. Any thoughts on that?
I’m about to bash the shit out of PLTR and then we might buy it anyway lol. But here’s the general thought process of PLTR:
So as I mentioned a few session back. Maybe a week ago. PLTR is likely fueled by retail FOMO than actual institutional interest. Its P/E ratio was sky high. Very much a potential bubble. And it’s hard for me to ever use the word bubble. Here’s my short note on PLTR. It was the last update of the session on Feb 10.
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Now the entire reason I bring this post up is that the big problem with bubble-ish stocks like PLTR is that it becomes difficult to evaluate a trade on the stock because one must always now look at every sharp 10-20-30% pull-back through the bubble lens.
When Nvidia falls 30%, I have ZERO concerns about buying it. None. Zilch because I know the earnings are there to support it. I know that from a fundamental and valuation standpoint, I’m totally backed up.
But with PLTR, the company is already valued beyond any price level that’s future earnings will ever support. It’s trading far beyond its TAM. That’s not great.
PLTR is trading at a level where even if it were to capture 100% of its total future expected installed base, its earnings wouldn’t rise enough to warrant the current price in the future. Nevermind today. That’s what a 605 P/E ratio means.
It trades at 50 times its actual sales.
So hard for me to give an outlook because if the market wakes up to these facts, then oversold will be meaningless.
Alternatively, if the market decides it wants to continue Gamestopping PLTR, then it will bottom and surge to $300 or whatever bubble level investor plan to take it to.
The point is that PLTR is a high gamble risk at this point because every time it reaches oversold, one has to wonder whether the game is over and the bubble bursting.
Hence, why we trade high quality names that have established earnings and clear-cut strong strong valuations.
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Now suppose PLTR were a solid company. It’s deeply oversold on the hourly. First instance. Historically, it has done well off of oversold conditions. But the buying interest is insane obviously. It’s an internet and retail superstar. So of course it’s going to do well off of oversold.
We do have a huge gap to fill down toward $82. But $100 is a key psychological support level, so it’s possible we can bottom right around these levels $97-$101 zone.
If I were to trade it — and we might trade it in Baratheon — we’d buy like $2,000 wort of the stock. Every $20 it moves, we make $400 which is about what we derive in a normal trade in Baratheon. The good news is that PLTR doesn’t have an expiration date.
So that’s how we’d trade it.
Yeah i’m definitely weary of PLTR but somehow it always goes up!
Yeah I’m watching it closely. If it gets down to the low $90’s, we’ll buy it for sure for a trade. There’s a way to trade it and a big potential return to be had using a mix of shares, options and hedges.
does the run toward 150$ already over before earning for NVDA ?
Not sure. what we’ve shown is Nvidia is resisting selling pressure off of overbought conditions. That is a very bullish marker. Read the update I posted on Nvidia today at 11 am.
The relevant factors are this:
(1) Nvidia reached extremely overbought territory at $144 this week. We showed you in a chart above what happens when Nvidia historically reaches extremely overbought. Normally it pulls back $13-$20. That’s what we showed with the overbought table. That table tells us Nvidia should fall to at least $130 before earnings.
HOWEVER…
(2) Even though the chart says $13 pull-back should happen, so far, there’s a lot of buying happening and Nvidia might just ignore the historical trend. Especially with earnings right around the corner now.
(3) Nviida has been in a very long consolidation period now. 8+ months. Sooner or later, it’s going to breakout and rally to $170. Earnings can easily be the catalyst that does that.
(4) The QQQ is setting up to breakout above its $540 resistance. When the QQQ does breakout, then so does Nvidia. As goes the market, so goes the individual components.
Making short-term forecasts when we don’t have clearcut signals is difficult. If Nvidia were oversold right now, we can confidently say what will happen. But the stock isn’t oversold. It’s neutral right now and in fact, coming off overbought.
So it’s not easy to make a forecast as short-term as earnings next week. What we can say is that in the intermediate-term it looks very strong.
There’s a reason we’ve reduced our long position in Nviida in our short-term portfolios in half.
In fact, in Targaryen, we’ve reduced it down to 33%. We had a much larger long position in Nvidia in targaryen but reduced it down.
We did the same in Baratheon by selling covered calls. That’s how we feel about the stock right now. A little uncertain near-term.
More confident overall intermediate-term wise.
WMT today made me less confident in NVDA earnings next week. I don’t see any advantage for any company to give positive guidance, especially one in the crosshairs of tariffs. Leadership is many things right now, but steady and predictable it is not. I hope I’m wrong, and I hope as you say the technicals can see through the clouds.
Please see key update on Nvidia posted at 11:00 AM EST.
So if NVDA is possibly about to take off, when do you consider a long position?
Well we’re already super long with so many shares and options coming out of our ears. For a trading opportunity, it’s not so obvious. It’s actually really difficult to gauge the breakout and trade the Nviida momentum with anything other than just common stock or NVDL. It’s why it’s prudent to always remain long and to take long-term positions during corrections like we did with Stark. Even though stark is underweight right now and sitting on 36% cash, it’s still doing really well and positioned to really capitalize on any big run in teh market or in Nviida. Stark is up 14.5% already while sitting on $35k/$100k.
The perfect portfolio as Sam Weiss is concerned is Arryn + Baratheon + Targaryen or Lannister + Baratheon + Targaryen or Stark ++.
When approached like that, one is already deeply long Nvidia and set up to capitalize at all times. That’s the perfect balance.
If you take those three things together, this is what Arryn looks like for example:
$115,000 Beginning capital
Arryn = $187,750
Baratheon = $13,966
Targaryen = $7,817
Total Return: $209,533.00 (82.20%)
Now while we might be on the sidelines with our trading capital, our core long-term positions will off-set any opportunity risk sustained in the trading portfolios.
I think that’s how to really approach the market.
Thanks. I should have added that I’m following Stark. I had forgotten that we do have some NVDL shares, because of some separation in viewing positions through my platform and brokerage. It’s just tempting to get some LEAPs for NVDA, because they’re so unlikely to lose. I realize now isn’t the ideal circumstances, but even a 130c a year or two out is enticing. I’m considering doing something if there’s another sell-off tomorrow, seeing as NVDA has basically recovered today’s. It’s tough sitting on a bunch of cash, feeling like NVDA is about to take off.
any preference NVDL vs NVDX? why one vs other?
One look at the 3 month or 1 year charts should answer that question. It seems NVDX loses more during corrections than it gains on rallies. NVDL has been impressively stable.
Do you have any general guidelines for a portfolio what proportion should be kept in long positions and what percent can be alloted to trading opportunities? I’ve seen 60/40 split online, wondering if you had any thoughts (maybe it’s highly dependent on an individual’s financial situation, but in terms of best ratio to keep for growth)
Is that a typo? Going down to high 420s is like a 20% drawdown.
I’m pretty sure Sam meant 520.
Yeah that’s a typo. Big time lol.
It’s not on your watchlist but I see an opportunity developing in JPM. It’s below 30 RSI-hourly.
I checked past occurences in the last year or so, and if daily-RSI goes <= 50 with hourly-RSI <= 30, 100% chances that it rebounds at least by 16$ within 6 weeks.
Note quite oversold enough for our liking. We’d like to see more downside. At these oversold level’s, we’ve seen JPM drop another $10-12 in the past. Two instances where this would only really be the start of a larger sell-off. Not sure what happened. What drove the selling? We’ll keep it on our watch list.
True, I saw those few occurences where it went furter down, but note that they’ve also recoved +16 point within 6 weeks nonetheless.
Same for HOOD too
It’s the same with GS and seems to be affecting all the big banks. I haven’t found a clear explanation yet. Just two days ago, analysts were predicting an excellent year for the financial sector.
I could not find a single event that would really explain the drop today of the financial sector. The only thing I found is that the entire financial sector performed exceptionnaly well from Jan 1 to now, so much that they contributed a significant portion of the S&P500 growth (relative to the tech sector). Much more than last year. So it may be a reversal to the mean.
I forgot to attach this illustration.
Whoa I searched for a stock symbol ELI5, couldn’t find it, then found by searching the Internet. LOL You must the quite young or I’m old !
I don’t know, Sam would have to explain what he understand from this data.
Trade Alert: Sell to Close Microsoft (MSFT) April 17, 2024 $415 Calls @ $16.50 x 1 contract in Baratheon Portfolio
Just a head’s up for those subscribing to comment e-mails. we closed out our Microsoft trade.
any thoughts on TEM today?
TEM is an extremely volatile situation. It doesn’t have a long trading history having hit the market just this past July.
It has had massive volatile swigs. Hard to really forecast with the data we have. Consider this.
It IPO’d at $44 and immediately crashed 50% in just 7 days. It then rallied all the way to 77 a share. That’s 200% in just 2-months time. Then another 50% crash down to $40 followed by another massive surge to $80 in 5-days.
Another crash to $31 over 2-months. That’s a 60% drop in 2-months. Followed by this recent rally to $92 a share.
I don’t know whether to short it or what lol.
It’s too voaltity to know how to trade it.
I mean it did reach extremely overbought conditions upon reaching $91.50. People were probably in it for the push to $100 right?
There could be rug-pull happening there just short of that key $100 price target or a genuine pull-back off of overbought conditions.
I’d probably stay away unless it sustains another crash. The only consist thing I see in the chart is the last two times it reached overbought conditions on the daily, it crashed big-time. See for yourself (chart attached).
appreciate it!
Sam, what are your thoughts on NBIS short and long term?
Several issues with NBIS as we’re concerned. First, we don’t know anything about it fundamentally. Running a full financial/fundamental analysis takes a lot of time to do it right. It hasn’t traded long enough to establish any sort of trends in the stock. On top of that it’s very volatile. It did reach extremely oversold in January and then it rallied big time off of those oversold conditions. that was clearly a good trade setup.
I think if it did the same thing again AND the valuation/fundamentals look promising, it would be with a trade.
It takes both an understanding of the fundamentals and good technical to make a trade like this work.
Whereas an established bellwether that has a long history of rallying off of oversold condition And is universally accepted as strong fundamentally is substantially easier to trade.
Putting $TTD on your radar as well. Sold off coz they missed ER first time in 33 Qs and had a disappointing guidance update for 2025. I think they’re sandbagging.
Saxena White P.A. Files Securities Fraud Class Action Against The Trade Desk, Inc. and Certain of Its Executives | Nasdaq
I also saw $HD traded at RSI<25 and now bounced a little. It also filled the gap of $393 recently. Previous gap fills like these results with another higher leg up. Is it a good stock to look into too?
Edit: Similar setup happened in Nov’23, right before ER too, and it went +$100 in next 5 months.
Home Depot has a tendency to go extremely oversold and then part of the time it doesn’t even bounce after reaching those extremes. So we probably wouldn’t trade HD in the Samwise Portfolis due to its inconsistency on adhering to overbought/oversold rules. Currently at a 25-RSI. I think for us to trade it, we would need a truly big set-up. That means 20-RSI on a second instance for an extended period of time.
Sam,
You mention gap fills fairly often. There seems to be a certain gravitational pull they possess. Why is this?
The market doesn’t like it when a stock doesn’t trade at a certain price. Some technical indicators are inherently or intrinsically sound. For example, if a stock reaches deeply oversold conditions, it means a lot of recent selling has occured which in turn leads to a lower supply of sellers and the discount causes these tock to look more attractive increasing the supply of buyers which in turn leads to a rebound. Add people and machines like me into the mix and you have a huge supply of buyers. Oversold refunds becomes both self-fulfilling — it bounces because markets and algorithms buy on on it leading to the rebound — and intrinsically driven (the supply of sellers wanes).
When it comes to support and resistance levels it’s also intrinsically driven. If a bunch of people buy a stock at $150, the stock drops to $130 and then goes back up to $150, all of those people who bought at $150 are now selling due to loss aversion. Hence you get resistance (a place where all sellers converge driving the stock lower). Intrinsically and self-fulling. People like me see it and say “hey look, resistance! let’s see. And we pile on.”
The same thing happens on the other side with short-sellers, people who missed the entry and people like me. All together causing support to occur as we all step in and buy.
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Gaps are almost exclusively all self-fulling — technical traders and algos put their orders I nat gap levels and it leads to the expected result. It makes no sense. All we know is the market does not like gaps, they form major support and resistance lines and they all tend to get filled. Especially back-to-back gaps — situations where a stock gaps up from $130 to $150 and then later on gaps down from $150 to $130. That $20 gap in both directions leads to a high probability of being filled after some time has passed.
Hi Sam, what are your thoughts on ARM and HOOD? Potential momentum stocks worth trading?
Hi Angel — I posted an analysis on Hood below. As ARM is concerned, I don’t know anything about its fundamentals or earnings. But here’s what I’ve noticed about its technical. It does very consistently rebound of off oversold conditions historically. there were a few instances where it went very deeply oversold. But for the most part, a layered trade would likely do well. For example, buying a first position at 20-25 RSI and a second position if it drops further and then closing the first position on the rebound and holding the second for a larger rebound would likely yield a successful outcome as ARM does consistently rebound off oversold. That’s how we’d play it on a trade.
Intuitive Machines (LUNR) has a scheduled moon launch next week. Last time they had a launch in Feb 2023 the stock went to $40, do you think there’s a trade here before next’s weeks launch?
Are you sure it’s this stock what went to 40$? LUNR 52-weeks range is 3.15 to 24.95.
It would be outside the 52 week window happened 02/2023 two years ago
That’s a straight gamble. It’s forming a head & shoulders top pattern. It might be an entertaining trade and it certainly can skyrocket. We’ve seen it happen before. The stock was at $3.00 in August. So being where it’s at now probably has to do with a run-up to the moon launch. The time to have gotten in would probably have been well ahead of the launch. Now it’s sort of a gamble. Launch goes well, maybe it runs a bit. Lunch goes poorly, it’s a crash in the stock for sure.
I agree it’s a gamble. The scenario I’m looking at, and I think happened two years ago and may happen again, is that the stock ran up to ridiculous heights the two days prior to the actual launch: Went to $40 on Feb 13, 2023 and the launch was Feb 15, 2023. Sadly the lander landed sideways lol and the stock plummeted, however I think it might be a good trade to exit at the height before the launch happens.
COST down reaching oversold on the hourly on WMT earnings, deeply oversold now.
Yeah all the retailers are taking a hit. Costco, Amazon and WMT all hit. COST did its $1000 breakout thing and it’s not really oversold. For now, not interested in COST or WMT. I am interested in Amazon and that’s what we might trade soon.
Both COST and WMT haven’t taken larger enough drawdowns yet.
SW, what say you about AMR
AMR looks like a company kinda hated by the market. It has been on a non-stop downtrend since February of last year.
Stocks in long-term death spirals like that are typically bad investments. There are exceptions to that rule obviously.
When the market is not in a bear market a stock drops like we’re seeing with AMR it’s typically bad news. The same happened with Apple once (2012) or twice (2015), but that is the rare exception.
Look at Baidu for example. That’s what AMR reminds me of. I don’t know anything about it or its fundamentals. Stocks do something crash for no reason and to sus that out, you’ll have to do a deep dive into its financials. See BIDU as an example of why not to invest in stocks that are in long-term downtrends.
Great response as usual. Thank you!
Sam – a ticker that caught my attention is COLM, it appears deeply overbought. Surface level the financial metrics may indicate that it’s overvalued (all time high, PEG>1, high short interest, neutral or worse analyst ratings, etc.). Testing with you if it’s a momentum enough of a stock to look into? thanks!
sorry 52 week high, not all time high
So the stock looks to be a relatively low volatility stock. It must be a value play or something. it’s the most overbought it has been in 3-years. But its 3-year trading range is relatively tight. Even the QQQ has a wider trading range:
COLM would be a decent stock to buy oversold as it looks very stable. In terms of momentum, harder to say because it does’t really go on sustained rallies.
So I don’t know enough about Robinhood fundamentally speaking. It looks extremely successful obviously. From a trading perspective, it reached a 30-RSI, bounced and is not retesting a 30-RSI again on the hour. It filled its gap. that looks like an earnings-based gap.
If the fundamentals are strong, then clearly it’s in a spot where a first entry might make sense. Like if we were trading it at Sam Weiss in Baratheon, we might take a first entry at around a 30-RSI (right at $54 or under $54). Keep in mind that Robinhood has fallen to deeply oversold territory in its past off of its highs too. So it could do that here. Hence why we’d layer in. Also, if you go back and look at some past instances, it reached extremes, didn’t bounce and then crashed. So there’s a lot of risk on the technical side of things. Take look: