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Upside not limited for BIDU, EDU, HMIN

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advance2 February 15, 2012 (Chinavestor) Most Chinese stocks look good from a technical point of view this morning. Even New Oriental Education (NYSE:EDU) has more upside left, according to the overbought chart. Despite recent rally, Baidu.com Inc. (NASDAQ:BIDU) is looking good and may continue to rise before announcing earnings after the close on Thursday. NetEase.com Inc. (NASDAQ:NTES) is due with 2011 Q4 today after the close. The stock is not overbought and has upside should earnings exceed expectations.

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There isn't much change from yesterday on the oversold screen. Sohu.com Inc. (NASDAQ:SOHU) might have found a bottom after a disappointing 2011 Q4. Again, top line was above expectations but lower bottom line for last quarter and for 2012 Q1 is still hurting.

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Overbought A technical condition that occurs when prices are considered too high and susceptible to a decline. Overbought conditions can be classified by analyzing the chart pattern or with indicators such as the one above. A sharp advance from $15 to $30 in 2 weeks might lead a technician to believe that a security is overbought. Or, a security is sometimes considered overbought when the stock is trading out of its trading envelope and is approaching the theoretical high. It is important to keep in mind that overbought is not necessarily the same as being bearish. It merely infers that the stock has risen too far too fast and might be due for a pullback.

Oversold A technical condition that occurs when prices are considered too low and ripe for a rally. Oversold conditions can be classified by analyzing the chart pattern or with indicators such as the one above. A sharp decline from $30 to $15 in 2 weeks might lead a technician to believe that a security is oversold. Or, a security is sometimes considered oversold when the stock is trading below its trading envelope and is approaching theoretical lows. It is important to keep in mind that oversold is not necessarily the same as being bullish. It merely infers that the security has fallen too far too fast and may be due for a reaction rally.

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