Samwise Model Portfolios
The portfolios below are separated by launch dates. Each portfolio is entirely independent and has no bearing on any other model portfolio. We launch entirely new portfolios during each market correction as an illustrative tool for new subscribers who weren't present during...
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market in shambles. Can we get more updates to keep spirits up. lol
Thank you for all your input Sam!
Let’s just hope NVIDIA delivers next week, so it’s not fuel on the fire of a potential correction
Does the sideways trading action for much of the afternoon further decrease the probability of a full blown correction?
Yes, it does. Mostly because it indicates reluctance by the market to push the indices down more than 2%. In a correction, we should see 3 to 4% down days. But really we won’t know until the rebound happens.
The only thing that makes this a more likely scenario than usual is the fact that the QQQ is up around 20% from the lows. Really that’s it. Eventually, one of these smaller 3 to 4% pullbacks will be a correction.
Originally, our expectation was at the 550 level for the reasons we outlined in the current Outlook. With the pullback happening off of the 515 highest (instead of $525-$528) I think the eventual peak will be significantly lower than 550. But as of right now, I still expect another leg up that takes the market to 530-540. At that point, our expectations for a correctional skyrocket. It’s really a mix of time
+ returns + general sentiment.
the explanation was in the next paragraph. So in order for us to put on the trade, we needed to see the QQQ RSI remain oversold for a while because that increases the probability of rebound. If the QQQ had reached oversold conditions and immediately rebounded, we wouldn’t have had the opportunity to buy beforehand if that makes sense.
Here’s why. Let’s say the QQQ just reached oversold conditions — which it did right at the beginning of the day at like $502. Often, that’s meaningless. It could easily go down for another 4-6 hours after that and it did. It pushed down all the way to $494 all while being oversold. So the plan was to wait for the oversold conditions to widen to get long.
If the QQQ had immediately rebounded before we could get in, then it would leave us out of the trade.
The point is we weren’t going to buy just on incrementally oversold conditions. We needed optimal conditions since we were buying outside of a correction. The QQQ falling to a. 25-RSI on the first hour still has too much downside risk in it for us to get long. But we also need it to remain oversold until we could get long which would be hours later.