Samwise Quick Reference Handbook
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with Nvidia hovering close to 190, does this drastically increase the probs of 200?
Hey Sam,
Didn’t you say that it was very unlikely for the QQQ to consolidate around at 600 for longer, since it just consolidated for a long time at 570/80 (which according to you was unlikely as well due to the market having just consolidated for a long time in January/February)
I’m not trying to be a dick here but I think it’s safe to say we don’t have a clue what’s gonna happen. Yeah sure, it won’t rally to 300 days or do some other truly crazy stuff but otherwise we’re just flying blind at the moment. That much I’ve learned since the the last correction..
Well, no one ever said calling the top was easy. It’s anything but easy.
So yeah I wouldn’t expect a month or two month long consolidation like we saw. I doubt we see something like that. But we could still go through a rally, retest and top scenario. In fact, we’re seeing the same exact pattern emerge here like we saw back in July 2023. Same thing happened. We had consolidation that lasted several weeks at the $340-$370 zone just like we had here at $574-$590. It lead to an eventual breakout to $388 which lead to a peak, a retest and correction.
We’re seeing something similar here now.
Also, consider this:
It’s not me saying this. It’s the market saying this to you. I don’t just make statements without any evidence backing it. We showed the chart on this exact thing.
There have been zero scenarios where we had a long consolidation after a long run, a breakout and then another long consolidation. We haven’t seen it.
We have seen the market conslidate, breakout, then quickly peak and correct. We’ve seen that plenty. Long duration rally leading into consolidation that leads to a. breakout that leads to a correction. <— this pattern has occurred a number of times.
long duration rally > consolation > breakout > consolidation <—- this pattern we haven’t seen.
So what do I do with that information? Do I publish it or just keep it to myself. It’s not me making these ‘prediction,’ I’m merely presenting what the market has shown us historically.
Can we get a 1.5 month consolidation followed by a breakout to $600 followed by another 1.5 month consolidation? Sure. It can happen. It just hasn’t happened before.
—–
In terms of “knowing” whats’ going to happen. Of course, there’s no way to know how it’s going to play out. All we can really do is outline different likelihoods and plan accordingly.
For example, we showed the pattern going back all the way to $100 share on the QQQ right. We outlined it.
The QQQ literally followed this exact pattern:
Top at $100
Top at $150
Top at $200
Top at $250
Top at $300
Top at $350
Top at $400
Top at $450
Top at $500
Top at $550
And now we’re at $600. Do we have a clue as to what’s going on? Sure. Do we know for certainty? No. Can the market buck that trend. Sure it can. OF course it can.
But our job is to do the best way can to figure out and to allocate accordingly. We bet that the trend continues. We make sure the bet is measured so as to limit our risk in the event it goes in a different direction. But that’s all we can really say.
If it bucks the trend this time, does it mean the date is no good now. NO. Not at alll. You can have an outlier event and the market can go right back to the trend.
Sam, I understand your point about the power of being cash-based, but I’ve been since the end of May, and I can tell you that the opportunity cost is enormous and continues to be so…
Moreover, numerous analyses have proven that it’s more expensive to be outside the market because of the opportunity cost of missing the best sessions compared to the probability of missing the corrections ????
I speak from experience because I was on NVIDIA x3, x5, x6, and x10, and I sold everything way too early because I was also anticipating a pullback at the end of May, June, and July…
I kept a few boosts in mind to remind myself of the PRU and performance… No, I’m not a masochist ????
Now, even an 8% correction seems risky…
Hey Karl, I mean that’s a completely different thing from what Sam is advocating for here.., of course there is opportunity cost, but the way Sam runs the portfolios I personally can’t see why there would be, if he ran them like you did then yeah, that would be a problem
I understand and feel your pain Karl. I also sold way too early. Very frustrating!!
There is definitely some opportunity cost and FOMO but probably not as bad as we think if you take theta decay into account. I have to imagine that July-August grind period took a lot of value off.
SO this is why it’s important to run different risk scenarios. We very very carefully chose to sell QQQ covered calls against our core positions at the $540 strike for $20 giving us an exit at $560 on the QQQ. We hafe an effective exit at $160 on Nvidia having sold the $150’s at $10.
So our re-entries are $160 for Nvidia and $560 on the QQQ. We feel very confident we’ll be able to do just that.
It took me a good long while to figure this out, but hone it comes to determine exit points, it’s important to look at the historical analysis to consider just how far the rally could go.
When we decided to sell the Nvidia $150 calls for $10, we didn’t just do so randomly. We choose that call option very carefully and based on certain expectations.
For example, from our perspective, the worst case scenario would be a rally to $200 on Nvidia. we felt pretty confident that $200 would be the absolute ceiling on a crazy parabolic run in the market.
What is the consequence of that? Well the consequence of that is a likely correction that takes Nvidai back down to $156 at a bare minimum (22% correction) and potentially down to $144 in a larger correction.
This is how we determine our covered call sales. What is the maximum ceiling based on historical trends and what is the likely bottom in the ensuing correction in teh worst case scenario.
For the QQQ, a potential run to $600 entered into our analyiss when we determine our sales at $540. If you go back and read what we wrote at the time as our justification for selling the $540’s at $20, it was that the QQQ will have had to return a 15-year record breaking 40% rally to even get to $560 AND tat even if the QQQ managed to go on a parabolic run to $600+, it would still likely correct back down to our entry.
^This is the general analysis that needs to be done when you’re considering opportunity cost and risk.
You have to consider the worst case scenario and what would generally follow from that. What would actually happen in the worst case and would I be able to buy back at exit point.
This is why I generally don’t like existing outright. I always prefer to sell covered calls at extremes. That way the market has to go through extremes in order for me to get called away. That protects me from opportunity cost.
Covered calls at extremes allowed us to participate in the rally from $520 up to $560 while also protecting our portfolio in the even the QQQ stopped at 36-38-40% returns.
Hi Sam,
Could you elaborate on
“And when we’re talking about leaps, the longer this drags on, the cheaper the leaps will be when the correction does acutal happen. Meaning, theta decay will do a lot of the heavy lifting.”
Wouldn’t we purchase our leaps with an adjusted DTE based on when the correction ends up bottoming? How does theta decay help us in this case? I was under the impression that we’e always purchase 2 year DTE leaps slightly ITM for around $84?
Thanks!
Here’s how. Let’s compare two situations. Situation 1: we never close our positions. Suppose we never sold covers calls which means we never collected $20 in premium and didn’t get an effective exit at $560. We remained long.
Situation 2. We sold covered calls giving us an effective exit at $560 due to teh QQQ losing north of $560 at expiration.
Had we remained in our positions, what follows? The QQQ rallies up to $6XX, peaks and then falls back down to $555 a share.
We then at that point decide to close out our position and roll them forward. The impact from theta decay is the point at which we roll.
If we don’t sell covered calls and continue to try and capitalize on every last drop of the rally, that’s the consequence.
—
The gain from theta decay is in avoiding having been in those leaps months down the line. It’s a question of what value we closed at versus the value of those leaps at the lows of the correction. Because those are the two situations we’re comparing. That right there is the benefit.
Remember, what we’re talking about here is the merits of selling covered calls and why doing so when a rally reaches 40% returns is generally going to be a really strong bet. In most cases, we won’t even see the rally make it to 40%. So when we sold them, we sold them while the rally was only near the low-to-mid 30% return range, but they gave us an effective exit at 40% QQQ returns.
The point of bringing in theta decay into the discussion at all is to say that the opportunity risk of getting called away when the QQQ is up 40% is miniscule. It’s minuscule because even if we’re forced out at the 40% return rate two things are likely to follow anyways.
First, the QQQ is very likely to return back to the price at which we exited. That’s due to the general laws on retracements and due to how far corrections generally go. If we exit at $560, the rally would need to continue on to a point where a 10% correction wouldn’t bring it back down to $560.
Where’s the point? It’ at around $630 a share. At $630 a share, a 10% correction results in a sell-off down to $567. But the catch of course is that at $630 a share, the QQQ will have rallied 57% from its lows which drastically increases the probabilty that it sustains a larger than 10% correction.
meaning even at $630 a share, the QQQ likely falls back to $560 anyway.
And then theta comes in and says, even it doesn’t, the value of an option closed at $560 a share will likely be lower at $567 3-4 months down the line. That’s the point.
It’s a question of whether by selling the $540 covered calls at $20 creates any true opportunity risk? And not just for this rally, but for all future rallies. If we sell covered calls that results in a forced exit at 40% QQQ returns or at $560, will we be able to buy back at either our exit point or lower?
I’m saying either at our exit point or lower and theta decay helps with re-entery. If we bought back the same contract we sold, we’d be able to buy back at at cheaper price even if hte QQQ bottoms at a higher level because of theta decay. That’s the point here.
hi Adam,
when you say final stages, what does that mean? no more consolidation? no more higher highs? immenirmt drop?
thanks
So when I say final stages, I mean this. When you look at a rally on the chart and if you circle the top of the rally, we’re at around that level now. Not the price pinpoint top. But if you draw a circle showing the general area where the rally essentially ended, that’s what we mean.
Because the QQQ is at $600 a share and trading in the low $600’s to be exact, and because of all of the other reasons we’ve outlined, these past few weeks, the QQQ is probably in it’s final stages. Maybe it puts back to $600 and then retest again. Maybe it just reverses one day and goes into a correction. Maybe one day it just gaps down and begin to sell-off. However it goes — and it’s impossible to predict how it will happen — we’re probably at the end of the road here with the QQQ trading in the $600-$610 area.
Take a look at this for example. These circles encompass nearly a full month of trading on teh charts. But the show the “final stages” of a rally. Maybe it tops at $610 maybe at $608 maybe at $615. They’re all about the same thing from the perspective of the entire run that stands $400 to $600 a share or 50% returns.
See attached.
watching spy I would think it would atleast try for that 700 level before giving up so i would say around 10 to 30 points on spy to go before we see a top but I cannot see much more room than that there. possibly correction of spy to 620 level right after. This is all speculation, price action and slow grind up would have us believe spy is going to 900 and 300 days before even a small 5% pullback let alone a correction. (/s ?)
I think what the SPY is doing right now is exactly what you’d expect on a mid-century test. $660 makes sense and the SPY is pointing out exactly where the QQQ likely tops in the next rally. $660-$670 is mid-century for the $600’s. $550 for the $500’s $440 for the $400’s etc.
That’s the general pattern we’re seeing.
Post makes sense. I don’t want to buy the qqq right now after a 42% run up. Money market and chill until the next correction.
Sam,
I appreciate you bringing up the mid-election portion of the perspective in today’s briefing.
To elaborate further on my opinion, I’m completely on the same page with the technical analysis. However, I want to emphasize that we should seriously consider the possibility that this rally could reach that “insane” stage of trading — potentially extending to Rally Day 300, right into mid-election.
Why? Setting politics aside, pushing this AI super-cycle market is the biggest card this administration has played. I personally didn’t recognize it until July, but all of this traces back to April 7, when the tariff policy started — and it was clearly intentional.
As you’ve mentioned in your previous briefings, we were due for a correction after the average 50–60 days of a rally. However, the market has ignored everything — literally everything: the U.S. raid in Syria, the July and August month turns, Fed cuts, and September profit-taking.
I 100% agree that the market now has little momentum left to move higher and that there’s not much upside remaining — and we’re sitting at 605. For me, it’s not about FOMO. It’s more about why we should avoid throwing money on the ground with these puts. (I get that this works as insurance, but still.) We capped our allocation at 12% max because we don’t know where the actual top is. That means we’re likely not at the top yet.
If we truly knew 605 was the top, we would’ve gone more aggressively. Maybe I just don’t fully understand the trading basics or risk management, but my view is this: the administration will not give up on the AI bubble card — they can’t. If they did, this rally would’ve ended around Rally Day 80 already, aligning exactly with your earlier posts.
We won’t know it’s a bubble until it bursts — but I just want to bring this to your radar: maybe it’s time to acknowledge that the bubble has already started. I’d rather put it on the list now than realize next year, “Oh shit, that was the AI super-cycle bubble.”
My opinion hasn’t changed since Rally Day 76. Knowing that this is already the longest rally, I think we’re incredibly lucky to witness this unusual phenomenon. I was only half-joking when I commented about NVIDIA hitting 200 — and now we’re just 11 points away, and it’s not even overbought.
The administration will continue to push the AI sector and keep trying to lower rates until mid-election. The Fear and Greed Index is at its lowest (not highest) since April 7. Oil prices are being held down. (I’m aware I haven’t pulled all sources and indicators — I just grabbed a few to back this up.)
I hope I’m not muddying the water here. Sure, there will be 1–2% pullbacks and consolidations, but my gut tells me the administration will keep pumping the market to drag in even more FOMO. Just wanted to share some ignorant thoughts — thanks.
Respectfully, thinking this rally can go on for 300+ days and cannot be stopped is indicative of the market euphoria expected near a market top. And to suggest that we can ride the bubble as if it’s just begun? What do you call the 50% rally we’ve witnessed over the last 124 days? However, I do find it strange that the greed fear index is currently “neutral.”
Sam actually touched on a lot of your points within the comment section of the Rally Day 118 briefing, and I found his commentary quite insightful. See below:
Sam Weiss Sep 25, 2025
But you see, this is always the case. All of these things are always present.
There are always fundamental cases to argue the market should rally forever. And guess what? it rarely ever applies.
In fact, when most correction happen, it’s rarely driven by anything fundamental. the market just randomly peaks and then sustains a correction.
By necessity, it happens out of left field. think about why? Most rallies top at the peak of positive sentiment.
So all five of these things you point out will inevitably be true during a 55-day 18% rally. All five and then some.
There’s no rhyme or reason to this from a fundamental point of view.
In fact, this eniormenet is nowhere near. Not even remotely close to the strongest of fumdanetal environments we’ve seen over the past 25-years and yet this is the 3rd strongest rally ever. Compared to the dot-com and post covid rallies? This environment is positive. But it ain’t that positive.
Remember the bernankne put era? The market actually believed that no matter what happens, the market will be protected. If the economy does poorly, Bernanke will step in and protect the market. If the economy does well then the market does well. Therefore, buy stocks with two fists.
That was the thinking during that Bernanke era.
NONE OF THE RALLIES during the Bernanke era can hold a candle to what we’ve seen here.
50% returns over 119-days now. Not even close. And those were some extremely positive environment both economically and sentiment speaking.
The Trump put can easily become the Trump dump. Remember the entire tariff era. Trump = volatility. One day he’s full blown pro market.
The next he could be like screw them all. I hope all you market participants burn. That was the thinking during the tariff era right?
At best, he’s a wild card.
The Fed put has been in existence since 2009.
The point is that fundamentals rarely tell us what the rally is going to do. beyond sparking a rally. The fundamentals are no indication for how long they last.
Understood, thanks for sharing your thoughts. can’t wait to see how this is going to unfold.
Likewise! Only time will tell.
Hi Sam,
Sorry for the necro-comment.
When you say
Can you elaborate on “for sure as it always does even on breakout”? Seems like you’re referring to reoccurring price behavior that is associated with a century mark breakout. I’d love to know more so I’m more aware about what generally happens. Maybe an example would be helpful too?
Thanks!