Samwise Quick Reference Handbook
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Sam, thank you for the daily analysis. I just wanted to add this to the comments because it really piques my curiosity.
I am currently seeing the exact same movement between crypto market and the stock market at the moment. Reasons behind seems to be that all of these stablecoins and Bitcoin ETFs are backed by U.S. Treasuries, which is driving significant inflows into the stock market as well.
What concerns me is that we may be in the “bubble” phase of this rally—meaning we only see 1–2% pullbacks until it finally pops. That would explain why we haven’t had any meaningful 3–4% corrections since April.
Normally, as you’ve pointed out in previous posts, there’s no such thing as “this time is different.” But given the unique bubble dynamics created by coin‑related products, it makes me wonder if we really could see an extended rally lasting 120+ days.
I’m fine with the market charging straight upward until it really pops, but I wanted to know if you had this on your radar. What are your thoughts?
Would love to hear Sam’s take here
So there’s nothing unique going on here at all. Cryptos rally with the market, correct with the market and crash with the market. Bitcoin often follows the general direction of the market when the market is rallying. Not always, but very often the case. If the NASDAQ-100 rallies 40% as it has, that’s typically going to pull cryptos up with it as money flows into risk assets.
Bitcoin isn’t just a currency. It’s an investment. So it tends to perform well in market rallies.
There’s nothing unique about the current market environment at all. Not from an empirical point of view. We’ve had four segmented rallies with pull-backs of 2.88%, 3.33% and 2.34%. The 2.34% is on the lower end but only very slightly so. The previous low pull-back segment was 2.54% in May 2023.
The market environment is slightly more bullish than previous rallies in this overall bull market that started in 2023. But not by much. We’re now at 77-days (as of today) for the rally. Still shy of our 80-day target and still nearly 5-weeks shy of 100-days. The segment has extended 1 day past the previous record, but that is a record on duration and not gains. The percentage gains are actually really low in term of return per day on the segment. If you look at previous long segments, the percentage gains per day were greater. Meaning, while this rally has matched and now slightly exceeded previous segments, the returns generated on the segment are middle of the road overall and low for how long it has lasted.
For example, assuming a $569 high today — haven’t gotten there yet — the segment has now extended to 8.66%. That is right smack in the middle and right near the average of 8.67%.
There are 12 segments with larger returns in the 8.67 – 15.13% range. So not big by any stretch.
Even as late stage segments go, it’s strong, but still within the range we’ve seen for late stage segments of 7-8.7%. So again, there’s nothing really unique going on here at this time.
And without any empirical data to suggest otherwise, it’s just anxiety. Recently, someone made the same exact argument but instead of crypto’s, they asked about how indirect QE could extend the rally. There’s always a reason to be anxious anytime you invest in any particular direction.
We had these same anxieties back in March – April during the correction. The problem is there’s no way to predict whether this time will be different. There just isn’t a way to do so. There are too many factors that go into the supply-demand dynamics of the market to predict that the market is going to go through an outlier event based on one set of circumstances like “cryptos rallying” or “indirect QE” or even fundamental shifts like “tariffs are off the table.”
The only thing we’ve seen really drive the markets higher –and still mostly empirical — is QE. When there’s direct QE in the form of asset purchases by the federal reserve, we’ve seen a direct correlation between that and the market rallying.
But in the current rally, what I see is a market that sustained the second largest non-bear market correction of the last 15-years rebounding in direct proportion to the size of the sell-off. That’s what I see right now.
The biggest risk is that the market does something in between what it did after Covid and what it normally does. So far the market has already done that. Up 41% is the biggest post-correction rally we’ve seen in 15-years. The second biggest rally of its type was 36.6% which was also the first rally off of the 2022 bear market recovery.
So up 41% already on 77-sessions makes sense. And we’ve accounted for that already. IN fact, we forecasted this rally would be a record as we’ve seen this precise correlation in the past. It was predictable that this rally would exceed 36%. Just to recover back to the highs alone was a 35% rally. That’ just to get back to $540 after falling to $401.
Thus, it made sense to expect a rally that exceeded the previous 36% record. Now that the QQQ has made about 30-points new highs — 5.5% above the previous highs — we’re getting a lot closer to what we normally see at peaks. Historically, the minimum has been 4% above previous highs. That’s how far rallies generally go after a correction. At least 4% new highs otherwise you have a double-top in play.
This rally has exceeded that point. So we now know there is no double-top or bear market crash setting up.
But to answer your question, there’s no way to really predict whether this intermediate-term rally overall is going to somehow go outlier status and run beyond 120-days. You can’t predict this even with QE.
Rallies like this have NEVER just randomly transitioned into a melt-up. That has never happened. And we’ve never seen a rally extend beyond 114-days. The only two times we’ve seen 100-days+ had extenuating circumstances. IN one case, we had an 8% correction we just ignored it because the correction felt more like part of an overall topping process ahead this past April correction. Truth be told, that rally really only went to 80-days, had a correction, a recovery that can’t really be classified as a rally and then the market just had a second correction after a month’s long consolidation.
The other, Covd, at 114 days had 10 separate major pull-backs during that period including something like 4 pull-backs that exceeded 6% each. So that was also a very different situations.
This rally, on the other hand, has followed the exact track that we see in most intermediate-term rallies. 3-5 segments with small 2-4% pull-backs and high returns of 25-40%.
Meaning, this rally looks very much like every other intermediate-term rally, just a little larger due to the larger recovery required to get back to the highs.
If I recall correctly, we never really got the 50% retracement we expecting during the correction, it just kept going lower and lower with only some smaller retracements. Do you think that’s related to the opposite now happening where we’re not getting any big pullbacks?
They’re not really related. As I mentioned above to Richard:
There’s nothing unique about the current market environment at all. Not from an empirical point of view. We’ve had four segmented rallies with pull-backs of 2.88%, 3.33% and 2.34%. The 2.34% is on the lower end but only very slightly so. The previous low pull-back segment was 2.54% in May 2023.
So far the segmented rally pullbacks are fairly within range of what we normally see. It makes sense for things to be a little more bullish than what we usually see given the fact that the QQQ is recovering off of a 25% correction — the second larger non-bear market sell-of since 2009.
25% is a massive correction. Almost a crash really. So a bullish recovery makes sense. We’re taking small differences here too.
2.88%, 3.33% and 2.34% are only very slightly smaller than typical. For example, 3.33% is right at the median. 2.88% is lower 35 percentile and 2.34% is a new record (previous record at 2.54%).
We now have a new record duration segment at 25-days. That exceeds the previous record of 24-days. But the rally was half as strong as the previous records.
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But to answer your question. There’s no relation at all to that. The environment is just a little more bullish. But the overall rally is very far along at 40%+ and now 77-days. We’re not at the very peak range of where these rallies all end. That’s in the 80-100 day range. But in terms of returns at 40%+ we’re very far along here.
Hello Sam, What is the probability of a market trap and therefore of seeing no correction by October 2025, but a sideways movement? I also appreciated your previous analyses on the scenarios and their probabilities of occurrence in the short and medium term. Even though I was fooled into exiting NVIDIA at $135 in mid-May because I agreed with you on the decline to $110-$120 before the strong rebound to $150-$170… Ultimately, we saw a strong, uninterrupted rally. The opportunity cost was enormous (I was positioned on NVIDIA x2, x3, x5, x10) for me, but I’m learning and I don’t want to return to the markets before a correction that I consider healthy because the current rebound seems too significant.
Sam mentioned this a few days ago. Patience. It also felt like this in April.
There’s no way the market just runs to all time highs and decides to sit there. If it were to happen it would be more neutral range, not run to extreme and pop a squat.
This week should be it based on where we are in the rally. I can easily see us topping Monday/Tuesday on the EU and China trade developments. However with FOMC meeting this week and monetary policy updates likely more hawkish than what’s expected, I see a pullback beginning midweek.
The economy continues to be robust and the job market is strong. So, with the risk of inflation rising it seems that the Fed will want to continue to keep rates where they are. I think they will indicate a much more conservative path forward through the end of the year.
For the moment on the night market QQQ point to gap up moderately tomorrow (+0.5%) and NVDA also by 1%.
Sam, I was looking back at the 2020 rally and it looks like from the bottom to the top, the rally was nearly 84%. Note, I didn’t count any of the pullbacks to the 20SMA as corrections and confirmed that you had the same result. Is there a possibility that this current rally could continue on similarly? Seems the bigger difference is the 2020 rally was able to moderate it’s RSI at a level below 70 more than this current rally.
So we’ve discussed that rally at length. We’ve probably brought it up several times. We’ve compared this environment to the covid recovery rally. You can find it on the intermediate-term rally tables.
So this is just not the same environment at all. First, that rally occured after a 31% crash in the QQQ. A 31% decline in the QQQ automatically results in a massive recovery. For example, if the QQQ had fallen 31% in this recent crash, the QQQ would be up 54% right now in the current rally (compared to up 41% right now). Why? Because to recover and then add 4% to the highs would demand a much much larger rally.
Second, a key difference between the Covid recovery rally (2020) and today is that the covid recovery rally was fueled by several mini-corrections. The QQQ had 10 aggressive pull-backs. Some exceeding 6%. We’re talking very aggressive sell-offs.
The way the rally unfolded was very different. We saw several 1-2% pull-back. I didn’t even count them. But more importantly we saw 10 big pull-backs of 3-7% each. And that really fueled the rally because in a way the market was retracing as it climbed.
But more importantly, the environment was fundamentally different. Here, in this environment, we’re seeing the exact opposite. The market isn’t sustaining any sort of pull-backs like this. In fact, the segmented rally pull-back — while largely in line with typical ranges — are on the small side. In other rallies, we witnessed very slightly larger pull-backs.
Also, this environment looks more similar to previous intermediate-term rallies than it does to the covid recovery. Meaning, if you look at this rally and compare it to any of the 5-6 rallies w’ve seen since 2023, it looks far more similar to those rallies than it does to the trading action we witnessed during the covid-recovery rally.