Stock Investors, This Will Change EVERYTHING For Your Portfolio Next Week.

All right, what's up everybody and welcome back to another Saturday here in the stock market. Well, if you've been watching my channel for a while, you know that I say all the time that Saturdays are by a far my favorite day to be a stock investor because it's the one true day of the week that we get the opportunity to just focus on becoming better investors. We don't have to worry about all the news of the week, the noise, prices going up and down, our portfolios making money, losing money, trades winning, trades losing. No, we don't have to worry about any of that stuff. We get a 24-hour window to just focus on leveling up our game. And this is a habit that I've built into my own investment journey since I first started in this market back in 2018, which was 8 years ago. It's crazy that it's been that long and I'll be honest, this has been one of the most impactful things that I've done as an investor. I dedicate as many Saturdays as possible to learning new skills and strategies and tools that I can take with me into the next week to try to grow my portfolios. And because this has been so impactful for me, one thing that I love to do here on the channel every week, every Saturday, is to bring you all an educational video teaching you some of these skills, some of these strategies, some of these tools that have worked so well for me so that hopefully you can level up on a Saturday, I can level up on a Saturday, and we can take on this next week with some new skills and hopefully make some more money. So, that's the game plan today. Um we're going to keep the tradition alive and I'll be honest, the skill that I'm teaching you all today, that we're going to be going over today, is extremely important. This will be one of the most important videos that we've made in this educational series by a far and I would go as far as to say those of you who don't understand how to do this, if you don't have the skill that we're going to talk about today, you'll probably never really find the success in the stock market that you're looking for. And I know that's a bold claim, but in a few minutes, I think you'll understand exactly why I'm saying it. So, we have a good bit to get into today and again, this one's going to be very important. So, get your notebook out, get that posture up a little bit and let's jump straight on in. So, in today's video, we are I'm talk about the skill of recognizing and utilizing overextensions. And if that sounds complicated, it's really not. This is simply just knowing when the price of an asset is too high or too low, and knowing exactly what to do when you recognize that the price is too high or too low. And the reason why we're going to be going into this today is because over the last 8 years that I've been in this market, I've met investors of all shapes and sizes. Some with $100 in their portfolio, some with 40, 50 million dollars in their portfolio. And no matter what size portfolio they had, the best investors, the ones who are generating the highest returns, were always the ones who were good at doing one specific thing. Buying the lows and selling the highs. And I know, I know, I know everyone wants to do that. I'm not groundbreaking. This isn't groundbreaking news. Everybody knows the whole goal is to buy low, sell high. But the reality is that no one really does this. I'm sure many of you have had many moments where you've seen the price down, you've not bought, it's gone up, then you've bought, then you went down, and you were negative. It happens all the time. Because although the whole core idea of the stock market is buy low, sell high, most people don't do it. But the people who do utilize overextensions, they recognize when the price is getting a little bit too high, and they sell. Or they recognize when the price is getting a little bit too low, and they buy. And understanding that, having that skill in your pocket, can put you ahead of most people in this market almost immediately. Which is why we're going over it in today's video. So, in today's video, my game plan for you all is to run you through the whole thing. We're first and foremost going to go over what overextensions are. Take the concept itself and make it very simple. Then we're going to talk about how you can identify overextensions. How can you identify when the price is getting a bit too high, or when the price is getting a bit too low? Then, once you see an overextension, we'll talk about what to do when you see one. How do you actually go about, you know, making moves when you see the price a bit too high or the price a bit too low? And then finally, we'll go look at some real examples of, you know, maybe SoFi or some AI trades of when they were too high or when they are too low and how you could have handled that in those moments so that moving forward when you recognize similar situations, you know exactly what to do. And my goal is that when you leave this video, you will have an actual skill, a tangible skill that you can take with you into the next week and no matter what the market does, you will know exactly what to do. So, that's a tall task. I have a lot of work on my hands, but I'm confident that you guys will be able to figure it out. I will remind you, look guys, this isn't financial advice. This is simply me just giving you some of my own experience, so take it with a grain of salt. And let's go ahead and let's get on in. So, first and foremost, what is an overextension? Now, we've already kind of talked about it a little bit, but let's look at it from much more of a dynamic perspective. So, an overextension is simply again when the price is getting a bit too high or the price is getting a bit too low. And what happens often times is that people think that stocks move like this, right? This is what they think a stock will look like. Over time it just goes up. But the reality is that in the mo you know, in the move of going up like this, what a stock usually actually looks like is this. Right? Pumps and dumps and pumps and dumps. And the goal of overextensions is to recognize these moments when the price is a bit too high and when it's a bit too low. Because if you understand where you are on the spectrum, you will have a much better time in knowing when is a good time to sell, which is obviously up here, and when it's a good time to buy. And if you've been watching my channel, especially for the last few months, you know that I have a bit of a knack for noticing these moments of overextension, right? Whenever things are starting to get a little bit too low, I'll be the one sitting there going against the grain telling everybody, "Hey look, look, I know this is scary, but man, I can't help but think that we're getting a little bit too low." Or whenever we're getting a little high, I say, "Hey guys, maybe we want to be a little careful right now, right? Things are getting a little dicey. Maybe you want to be a little bit careful." And so, the whole game is just recognizing that the price of an asset typically will be stretched like a rubber band. When you move it too far, too fast, it'll usually snap back into place. And that's how the stock market moves. It snaps up and it snaps down and it snaps up and it snaps down. And your goal as an investor is to recognize where it is and know how to respond. Now, the good part and what makes this pretty easy is that there's only really two sorts of extensions. You can either overextend to the upside, which is when the prices run too far up, too fast, and you're probably going to see a pullback soon. Or an overextension to the downside, which is the complete opposite, which happens when the price goes a bit too low, too fast, and you're probably going to see some sort of return back towards, you know, a middle ground of some sort, okay? And so, an overextension is simply, again, just recognizing those two things, too high, too low, knowing what to do in the moment that you see it. Now, I do want to add a little bit of a disclaimer, caveats, asterisks side of things. There are overextensions in many different forms, right? You can look for overextensions from a technical perspective. You can look at overextensions from a fundamental perspective. You know, one way that you can look for an overextension from a fundamental perspective is just looking at the P/E ratio. If the P/E ratio of an asset, let's call it Microsoft, is getting way too high compared to its historical average in the market, it's probably getting a bit too high and it's not a good buy. If the P/E ratio is getting really low and it based on its historical averages in the market, it might be getting a bit too low. That's one way from a fundamental perspective without ever looking at a chart that you can recognize overextension. But we'll talk about that a little bit later. In today's video, we're going to talk about the technical side of things. We're going to talk about how you can open up a chart, look at the Micron chart and say, "Okay, we're probably getting a little too high or we're probably getting a little bit too low, and this is exactly what I'm going to do as a result of it." And we'll do this using things like price action, indicators, and much more. All right. So, that's the landscape. That's the overview. That's what it is. Let's now talk about how you find an overextension. How do you go into a chart and say, "We're getting a bit too high. We're getting a bit too low. Well, there's three different ways that I personally like to do this. The first one being price action, the second one being sentiment, and the third one being indicators. Let's break down each one of those starting with price action. So, price action is simply just what the price has been doing. And I I I know that's stupidly simple, but it is just that simple. What is the price been doing? And most people can just look at a chart and know. You just kind of know. Like for example, if I was to go Let's do this. If I was to go to the weekly chart for Micron, and I was to Let's go replay and let's cut off Let's start a new one, and let's just cut that off. If you were to look at the Micron chart right here, and I said, "Hey, do you think we're too high or too low?" Obviously, you'll know, "Yeah, we're we're a little bit too high, right?" And so, naturally, in that moment, you'll know, "Okay, maybe not the best time to buy." But let's say hypothetically, you know, we're looking at a Micron that's way back here, and we're in this moment right here. We're we're we're maybe, you know, right here during this pullback, right? Whenever it came down to 65. If I just said, "Hey, do you think we're a bit too high or too low?" You'll look at this and say, "Yeah, well, we got a big pump, now we got a big dump. You're a bit too low." One of the easiest ways that you can identify an overextension is to literally just look at the price. Just look at the price. If it's obviously pumping straight vertical, you're probably getting too high. If it's obviously dumping straight down, you're getting a bit too low. That's not usually where we are, though. A lot of the times, you're in a situation like right now, where you're kind of high, but you're also kind of low, and that's the nuance that, you know, price action won't really help you with. But in general, a good starting rule is to say, "Okay, if you're looking for an overextension, just go look at the price." For example, when Microsoft went vertical, when it did this a few weeks ago, we all knew, like, "Okay, maybe not the best time to buy Microsoft because now it's just going straight up, overextended to the top side." But just like it was on the flip side, when we saw Microsoft crashing throughout June and July, we were looking at this thing saying, "Look, this thing's starting to get overextended to the downside" because it just consistently kept going down, just like this was consistently going up. But, the easiest place to start is just to read the price action. Another easy thing that you can do is to read the sentiment. This is a little bit less on the technical chart, but it is still on a chart. You can use like the Fear and Greed Index. You remember I made a video for you all maybe 3 weeks ago where we were talking about sentiment, and I told you it was very simple. If everyone's very euphoric, very, very excited, good time to sell, because you're getting overextended to the top side. If everyone's super fearful, super bearish, super scared, you probably isn't to buy, because people are overextending to the bottom side, right? So, another easy way to do it without getting super complex or dynamic or nuanced, how do people feel? How do people feel? Do people feel bearish? Good time to buy. Bullish? Typically a good time to sell. These two things, price action and sentiment, they're not as reliable, right? But, in general, they can give you a decent clue. Okay? So, I figured I would add them in there. But, let's talk about the real way. Okay? Let's talk about the real way that you can recognize when an asset is getting overextended, and that is indicators. Because, as I've told you all many times before, indicators aren't some sort of magic thing that you use. No, indicators are just math. And the beautiful part about it is that when indicators use math to measure the price and the price action, you can look at historical data sets to get an understanding of whether or not the price is historically too high or low. For example, the RSI, which I'm going to talk about in a second, constantly tracks the price of an asset. If every single time based in the history, the RSI hits an 80 level, that asset ends up pulling back within a week, guess what? Based on historical data sets, that price, when it hits 80, is getting overextended to the top side. It works the same way to the bottom side. And so, it uses math to actually provide you with an objective reason as to why something may be overextended, which is why I love indicators so much. And it's a part of the reason as to why I have made so many videos for you all here on the channel talking about some of these different indicators. And if we go look at the channel, I mean, you can see all those different videos, right? We talked about Let's go ahead and look at some of these awesome ones. Market sentiment. I just talked to you all about it. Before that, how to use indicators. Before that, buy or seller zones. Before that, the golden zone. Before that, we talked about the Bollinger Bands, right? It's the reason why I teach you all indicators so much because it is one of the absolute best things that you can understand if you're trying to spot overextensions. When is the price too high or when is the price too low? So, let's talk about some of the indicators that you can use and how to actually use them in order to identify moments of overextension. Now, I do want to let you all know, okay? All of the things that we're about to talk about next, the RSI, the Bollinger Bands, the HCI, my strategies, I've taught all of them already over in TH Capital. If you don't know what TH Capital is, this is the course community where you can find all of my educational material. As you can see here, I have a 4-hour course on technical analysis, 4-hour course on fundamental analysis, 2 and 1/2 hour course on building portfolios, hour-long course on introduction to stocks. I have a brand new swing trading course coming over the next few weeks. We do seminars as well. There's over 4 hours worth of seminars here where we went over my investment system, stock markets, confluence, taking risks. And that's just one side of TH Capital. All of the educational stuff, this is just one side of TH Capital. In addition to that, we have the Discord server, which is where you can find my thoughts, the stocks that I'm buying, the cryptos that I'm buying, all of my portfolios, a community of people who are actively talking all day long. Look at this. It's just going right now. Talking all day long about what's happening in the market, posting their wins. Look at this, 420% gain. Look at this, 250% gain. I mean, we have some absolutely outstanding people in the community right now. This fellow's portfolio, where is it at? Hold on. Where is it at? This is absolutely nuts. There was a guy, $300,000 portfolio he just hit up, $274,000 this year. Is that normal? No, it's not normal, but it's fantastic. This is the sort of community that you would be joining, and it's only growing, and it's only getting better. So, if you do want access to all of the educational material to learn about the indicators, to learn about all this stuff, and join a community of people who are winning, check out the link to TH Capital down below. And if you use the code extend, e x t e n d, I'm going to give you 20% off for life. You'll get 20% off for life, okay? So, check out the link down below. Let me know what you think. But, with that in mind again, let's jump into the very first indicator. The very first indicator that I love to use to identify overextensions, and that's the RSI, folks. Now, I do believe I have posted Yeah, I have done an educational video on the channel on the RSI already. So, I'm not going to go too deep into it. There's a 20-minute video there. But, in general, this is the easiest one to use because it's going to give you a very clear image of what's going on. When you pull up the RSI, it's very easy. You're going to go to indicators. You're going to type in RSI. You're going to give this a click. You're going to look down. Boom, this is what you got. You're going to have a purple line in the back. The top of the purple line is at uh the top of the purple box is at 70. The bottom of the purple box is at 30. In front of this purple box back here, you're going to have a purple line. It goes up and down. When this purple line crosses above the top side of the purple box, it means the price is starting to get too high. When the purple line crosses through the bottom side of that box, it means the price is starting to get too low, or it's overextended to the downside. And typically, the higher the time frame you go to, the better. So, what you can see here is that the second that we started to see Microsoft absolutely flying towards the top side, we saw that purple line go towards the top side of the purple box. It means you're getting a little bit too high. And sure enough, Microsoft started to slow down. Before that, whenever we saw the purple line cross through the bottom side of the purple box, right here, it meant that we were starting to get too low for the Microsoft price. And sure enough, that was right before it started to pump. The time before that, whenever we saw Microsoft pump to the top side, purple line goes above the purple box, it was an indicator you're getting a little bit too high, and right before you dump. So, every single time in recent history that we've seen the purple line go above the purple box, you were getting too low, or too high, right right right here, right here. And the same before that, below the purple box right here and right here was right before you saw a pump. So, if you want to know whether or not the price of Microsoft or any asset is too high or too low, pull up your daily RSI and go see if you're above the purple box or below it. And if you are, you're likely overextended in that direction. The RSI is a danglin' good one. Another one of my favorites is the Bollinger Bands. I made a video about the Bollinger Bands as well, I believe. Let's see. Somewhere in here, right? Pretty sure. Pretty sure I had to. Yeah, there we go. Okay, it was the one right after the RSI. So, that one also, the Bollinger Bands, is a very good one. If you want to pull it up, it's very simple. You're going to go to indicators, type in BB, it's going to give you the Bollinger Bands. And the Bollinger Bands are also very easy to read. What you're going to see when you give that a click are three lines, a red line, a green line, and a blue line. When the price of your asset pushes into or above the red line, it means you're getting too high. When it hits the green line or goes below it, it means you're getting too low. And the blue line is point neutral. That's the very middle, basically. So, when you're around that blue line, you're at a neutral point. And look, it doesn't work perfect all the time, and you can see there are sometimes where you'll stay above that red line for a while. But in general, when you get above that red line on the Bollinger Bands, you're getting too high. When you hit this bottom side green line, you're getting a bit too low, and that obviously can be a decent time to buy. So, a lot of people keep it simple. They'll go to something like the weekly charts, and they'll say, "I'm going to sell when Microsoft is in the red zone. I'm going to buy when it's near the green zone." And it works very well for them. I do have a full video on that down here. Feel free to go check that out. Now, the next indicator that I use personally is the HCI. If you know what the HCI is, this is the Hill Conviction Index. It's a part of the TH Toolkit. And this, in my opinion, is one of the best tools that you can use to get a read on what is going on with the price in the easiest way, okay? In the easiest way. So, this is the way it works. This is the HCI right here, the Hill Conviction Index. When the price goes up, this meter goes up. And what this meter is doing is it's tracking a whole bunch of different indicators, the RSI, the MACD, the Bollinger Bands, etc. And as those indicators get more and more overextended to the top side, this meter will go higher and higher. Once this meter enters into the bright orange bright red zone, it means the price is getting hot. It's getting a bit too high. And as you can see here, the further into that red zone it goes, the more likely it becomes that it's going to start to pull back. Now, as the price starts going down, when the price starts going down, this meter is going to start falling into the green zone. And the deeper into the green zone it gets, the more likely it becomes that the price is going to try to find some sort of reversal and start trying to pump. So, one thing that I personally do is I just look on the weekly or the daily chart and say, "All right, I'll buy Microsoft in the moments in which it's bright green. I'll sell it in the moments in which it's bright red." And as you can see here, that's worked out really well. And it's not just for Microsoft. I'm just using that as a random example. Look at Nvidia. Some of the best times to buy Nvidia were when the meter was green, as you can see. And some of the best times to sell were when the meter was red, just like this, right? And so, I personally use the HCI, but that is because I personally developed the HCI. I wanted something that was a little bit more um flexible, and it understood the complexities and the nuances that are here in the market. And it gave it to me in an easy-to-read way. I wanted something to literally just be like, "Hey, when it's in the red, that's bad. When it's in the green, that's good." I wanted it to be just that simple, and that's what the meter does, okay? It's the HCI. It's a part of the uh the T Hill the TH Tool Kit. You can also check that out down below. If you guys want access to the tool kit, the link will be down below. Feel free to go check that out. You can learn a little bit more about it here. I mean, there's this thing's just packed with stuff. You got I'm I think we have 350 of you who are using the tool kit now, so let me know what you guys think. Um it's packed with stuff. But nonetheless, that is the third indicator that I personally use when I am trying to recognize these overextensions. So, it doesn't really matter which one you use. You can use the RSI, Bollinger Bands, Stochastic RSI, MACD, the HCI. It It really doesn't matter. The whole goal though is to understand that indicators will give you the mathematics behind whether or not an asset is or isn't overextended, and that will of course lead you a little bit further to knowing what to do. So, with that in mind, let's now talk about what to do. Let's talk about how to capitalize on these moments in which you do recognize that a an asset is a bit overextended. So, it's pretty simple. Okay, it's pretty simple. When you recognize that a stock is too low, overextended to the downside, that's generally the best times to be dollar cost averaging. When you recognize that a stock is getting too high, that is generally the best time to start taking profit. Now, I know this sounds obvious, but the reality is that people do not practice this because of their emotions. When you see a stock falling, you get scared. You get worried, and you have that thought of what if it goes further down? What if it keeps falling? I don't want to buy Micron at 800 because what if it goes to 400? I don't want to buy, you know, Sandisk at 1,000 because what if it goes to 500? It's hard to get past those thoughts. And so, what a lot of people do is they don't start buying until it's pumping and they sell when it's dumping, which is the complete opposite of what we know we are supposed to do. And so, what you have to do is start trying to rewire your brain to be able to buy things in moments in which they're scary and sell things in moments in which they feel good. And the easiest way to do that is to look for moments of overextension through your indicators, sentiment, price action, and buy the lows and sell into the highs. Now, with that in mind, I want you to understand something. Overextended can always get more overextended. And what I mean by that is let's say you recognize that a stock, let's use Nvidia as an example. You recognize that a stock is going down. Let's go back to Nvidia when it was right here. You recognize that Nvidia is going down and its HCI is flashing green, and you're like, "Okay, we're overextended to the downside. I want to buy." Don't go all in just because you recognize that it's overextended because overextended can always get more overextended. You can always see them fall deeper into overextension. You remember one of the most, you know, famous and popular quotes in all of stock market history is that the market can stay much more irrational longer than you can stay solvent. Meaning that this market can stay stupid longer than you can afford it to. So, you always want to be extremely careful. And the moments in which you are seeing it either dumping to the downside, don't go all in. When you see it pump into the top side, don't sell everything. If you notice that you're in a moment of overextension, start slowly dollar cost averaging your way in. And when the price is pumping, start slowly averaging your way out. Now, if you're someone who just holds for the long term, you don't even really need to worry about this. You don't need to worry about selling in the pumps. You can just let it ride. But maybe use this as an opportunity to start slowing down on your DCAs or your purchases when you are overextended to the top side. And it's really just that simple. It's not like some sort of big complicated thing. The reality is that it's just hard. It's hard to go against your emotions. It's hard to go in and like go against the fear or go against the greed. It is really hard to battle it. But I'll show you guys some real recent examples of when we've gone against the grain recently here on the channel in front of all of you and how it's worked out. One of the most recent examples was SoFi. As many of you know, not too long ago, we saw SoFi take a pretty nasty dip after their earnings report. They released their earnings report right here on July 29th and we saw the stock price crash all the way down towards $14.80. When that happened, I was on a live stream. It was crashing and all of my indicators started going off. My HCI was at about a minus 3.84. You can see it right here. The HCI was at about a minus 3.84. Then it went down to a minus 3.47 right here and I was like, you know what? This is a good time to buy. So, I went in and bought some SoFi at $15.20, right? Um as you can see here. A $1,000 of SoFi $15.20. I bought it. And sure enough, although I was scared, not I mean not particularly, but although I didn't feel great seeing SoFi falling, I knew it was getting overextended. And since that purchase, that $1,000 purchase has now gone up about 24 to 21%. Meaning that $1,000 I put in is already made 240 bucks just because I recognized the overextension. So look, I know it doesn't feel good. It doesn't feel great and it feels wrong. Like it's not your primal thing is to run into the fire, but sometimes it's just what you need to do and it's the best thing that you can do for your portfolio. And this sort of practice, this sort of thing is the reason why over the last year I've been able to generate $75,000 in the public portfolio without really ever feeling stressed or without taking much risk. My portfolio is mostly S&P 500, but it's because I'm entering into these moments in which there is really high opportunity for me to be right. I can buy in the moments where things feel great. I can sell in the moments or flip that basically. Buy in the moments where things feel bad, but I feel great about it and sell in the moments where things feel great and understand that I'm going against the grain in the best way possible. And so if you're someone who's watching this video right now, what I really want you to do from a non-financial advisor perspective is to go into the next week willing to go against the grain. Use your indicators. Use the RSI. Use the Bollinger Bands. Use the HCI. Use price action. Use sentiment to try to find moments in which one of your stocks is either too high or too low and use that as an opportunity to go against the grain. Practice DCA'ing in the red or taking profit or just to kind of de-risking a bit during the green. And if you get in the habit of doing this, not only is your portfolio going to perform better over time, but you're going to be in a much better emotional position. When you see crashes, you see them as opportunities and when you see pumps, you see them as opportunities to capitalize on realized gains. And so you never get caught in this constant cloud of emotion that can cloud you from making the right judgment call in the moments in which emotions are high and people are going crazy in one way or another. So this is going to be very important for you guys to not just listen to me say today, but actually put it into practice. And so over the next week, what I want you to do is look for the indicators that make the most sense to you, whether it's the toolkit, whether it's the RSI, the Bollinger Bands, it doesn't matter, and look for moments of overextension. And one thing I should have I should have said earlier, but I do want to make it clear, the higher the time frame, the more reliable the overextension. So, if your weekly HCI or weekly RSI is showing overextension, that means you're very overextended. If your 10-minute RSI is showing overextension, it means you're overextended in like the today time frame, but maybe not so much in the big term. So, if you are new to overextensions high and low, what I want you to do is start with like the daily or the one-week time frames. Meaning that when you go to a chart, your chart represents every candle represents either one day or one week. It'll either be the D or the W up here. Use that. Start there. That'll give you a clear read, and then eventually work your way into the lower time frames if you start like leverage trading or swing trading, whatever, over time, all right? So, that's what I want you all to do. That is the way that I go about it, and that is what I personally use to build my portfolios. So, if you have any questions, please do let me down let me know down below, but on your way out of this video, there are two things I want you to remember. One, if you want to join TH Capital, there's a 20% discount code. It's e x t e n d. The word extend. It gives you 20% 20% off for life. And listen, if you sign up and you go check out all of the courses, and you join the community, and you decide it's not for you within 24 hours, I'll give you all your money back. So, you can basically go in realistically, watch all the courses within the first 24 hours, absorb all the information, cancel, and you get it for free. I feel like that's a fair trade because I believe it's so valuable that you're just going to stick around because you want to learn more and more, okay? So, I'll give you 24 hours to cancel. I'll get you full money back. In addition to that, the toolkit is down below. If you want to use the HCI, which is that meter that'll basically tell you, "Hey, the price is getting too high or too low," as well as many other amazing features such as the hill zones, for example, which tells you where the seller zones and the buyer zones are and much more, the link to that will be available down below. So, check those two things out. Of course, I hope you guys did enjoy today's video, and I can't wait to see you all in the next one. Peace out, everybody.