Samwise Quick Reference Handbook
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Retest!
missed our chance, rip
What chance?
We’re focused on October 17 for now.
I don’t want to field anymore “is this time different” questions. That’s the hold-up at the moment.
So there’s a fundamental difference between putting on a long-term leap trade that moves slowly, expires years down the line and a short-term put-spread that expires in a few months time.
The short-term stuff requires excellent execution and extreme discipline. Like when we say 3%, we mean 3%. Anything more is a train wreck.
And so that’s the hold-up. It’s execution risk. Drawdown risk. Anxiety risk. We’re trading off opportunity risk for a little more certainty.
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Remember back to January – April when we were heavily trading Baratheon and Targaryen. Those portoflios are 5-10% allocations each. Meaning IN THE BEST case, if you put on a 50% returning trade, it’s a mere 5% return. On a $100k, it’s a $5k return. Nothing special.
The same goes for busted trades. A 40% drop in the portofio is a mere 4% drop or a $4k drop on a $100k portoflio. Annoying, but not detrimental.
If you go back to April, there were days with 100+ comments in the comment section. That’s crazy high anxiety for what should be a 5-10% allocation yeah?
SO that’s the hold-up. I don’t want the trade to turn into that nonsense. The trade really isn’t all that important. Whether we execute it or not, we’ll still hae cash to allocate in the correction itself.
So my stance is to just do things with a higher degree of certainty even if that means missing the trade so to speak.
Also, we already have a Sep spread that will produce if the QQQ manages to unfold exactly as expected. If it doesn’t and there’s any real threat to the Sep trade, well then that means we’ll have a strong opportunity for trade #2.
For example, today’s reversal increases the risk of a failed retest. If that holds true, our Sep 30 spread will end up paying out in a big way. We’re good.
But if it doesn’t and the QQQ is up to $577 tomorrow, well then we’ll have waited a little longer increasing the certainty of trade #2.
So that’s the approach a the moment. We’re waiting until entry #1 is truly under threat to put on trade #2.
We might put on trade #2 today if the QQQ comes back and stabilizes long enough to put on the trade. If it comes back up to $573 and trades there for a while, we might execute it at that point.
What’s the word Sam? Peeled back to $569.
Still counts as a legitimate retest within 50bps of ATH.
5th segment seems unlikely
Hey Sam, just wondering if there are any plans to let us disable push notifications for portfolios we don’t follow. If you do end up adding that feature and create a new portfolio during the next correction, can you add it a bit early so I can turn on notifications for it in advance?
Thanks!
It’s actually already active. I just wanted to make sure there was enough time for EVERYONE to realize it. Here’s what I don’t want to happen. I don’t want to put on a trade and then have someone miss the fact that they can opt in or out of a portfolio and then miss the alert.
But it’s already live. I”m just sending out alerts to everyone each time. But I can just send Arryn alerts to Arryn etc.
I’ll make a post about it and then set a date for when we’ll stop sending out alerts wide. But it’s already in the app. Under app notifications.
Oh sweet, I can turn on notifications for a random long term portfolio then and it’ll work i guess. Since you usually put on trades for them at the same time when we get a bottom in a correction. Still not clear if you’re actually starting a new portfolio though? Would be nice to get a definitive answer on your plan for that before we bottom
Hi Sam, what’s the line for a failed retest? Is it the previous segment low ($551)? For example, QQQ could make a 4 or 5 attempts at $575 in the coming days, dropping back slightly to mid-$560s each time, but none of those are a failed retest until it drops below $551? Trying to get a sense of where that line is (so to speak)
Also unfortunate but understandable about drawdown risk and anxiety. I like what you alluded to a few days ago. If you believe in the trade, why would you worry? You believe there’s a high chance it’s profitable and if it wasn’t the reward was worth the (in this case minimal) risk at the time you executed. If you don’t believe in it, why would you put it on? I’m a little confused why someone wouldn’t just pursue a different strategy and stay invested in the market and ride the ups and downs as they come if “this time is different” risk is always at the forefront of their thoughts. To each their own I guess
It becomes a failed retest the moment the QQQ fails to make substantially new highs and then subsequently loses the 550 level.
That holds true, even if it’s weeks down the line
Let me give you an example
suppose the QQQ reverse course and goes down to the 560s as you mentioned. It trades up and down and around for a few weeks.
The highest point it ever reaches 578. But in the end, it reverses and finally loses 550 a share before heading into a full-blown correction.
That whole thing is still a failed retest. In the end, the QQQ reached an initial high point at 574. It pulled back 4% and subsequently was never able to make substantial new highs only getting as high as 578. That is still basically a double top.
That means 575 resistance band held. When it comes to breakouts and breakdowns, it’s not a very specific line, but more a zone.
For example, let’s say the QQQ got down to a $549. That’s not really a breakdown if the QQQ then rebounds back up to 580. A two point breakdown is meaningless.
If that occurred, we would say the QQQ held its support at the 550 level momentarily, losing it for an hour before recovering.
It’s only a breakdown if the stock then starts to slide after the breakdown.
A partial breakout and a partial breakdown is meaningless as well. We need actual bona fide evidence of a breakdown or a breakout.
For example, let’s suppose the QQQ got up to 582 and then suffered to 10% correction
Is the QQQ moving up seven more points above its initial at $574.60 substantial? did it really make any difference? Not really right it’s basically the same as having talked at 575.
In the end, when looking at the chart long-term, you would say “oh I see what happened here. The QQQ got up to 574. It pulled back and then tried to make a breakout move, and it was only able to go up eight more points. It would look like a major double top on the long-term trend.
It’s not substantial. A substantial breakout would be the QQQ running to 600 or even 595.
By the same token, the QQQ does ultimately break down below 550 then must slide for it to matter.
Rather than thinking, the QQQ broke down under 550 so that’s that. It’s better to think about breakout points and breakdown points as strong evidence in indicative of an outcome.
Like it’s bad news for the QQQ to lose the 550 level Doing so it would be a very strong indication that we’re in a correction. But it is by no means definitive.
We’ve seen lots and lots of corrections where the retest cycle was very clear cut. The QQQ reaches a high point it pulls back 4% it retest ties and then breaks down and that’s that.
The last two July corrections followed that precise pattern. In 2023 the QQQ came within one percent of the highs and in 2024 it came with half a percent of the highest on retest.
This time we’ve come within like 0.2% of the highs. This has been the most aggressive retest out of the last three years.
Gap filled
Does it being the “most aggressive retest” mean much?
Thanks Sam. Zones is a good way to think about it. I guess today’s movement gives us some more information but still in no man’s land until there’s a strong meaningful push past $575 or below or drop below $550
QQQ definitely lacked the follow through. If tomorrow is a red day, chart doesn’t look so strong to make ATH.
no way…. strong close…
True, but look at SPY : it had a relatively strong close but still on the weak side, at least weaker than QQQ.
When it happens in the last 10 minutes, like this, one contributor are the day-traders that close their positions. It flutes in the opposite direction of the day, very common.
Hi Sam.. I’m getting a web page error when i try to log in to the Web version.. can you correspond using my email account to outline support or a solution please?
Our NVDA Sep Put are bleeding ????
Another retest
Very aggressive move up to $574+