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RENN, BIDU, DANG to watch

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watch_4 April 16, 2012 (Chinavestor) Stocks of interest on the overbought chart this morning include Renren Inc. (NYSE:RENN), E Commerce China DangDang (NYSE:DANG) as and Feihe International (NYSE:ADY). Baidu.com (NASDAQ:BIDU) is on the top of the overbought chart because it is trading closest to theoretical highs. But make no mistake, the stock is far from being overbought. As a matter of fact, a run to $155 looks possible for BIDU on Google's strong earnings from last week if overall market sentiment turns positive.

The size of the arrow on the chart below suggests that Renren Inc. (NYSE:RENN) advanced too much, too fast. More upside is possible because the stock is far from theoretical highs but downside risk is on the rise! Another hot stock to watch is E Commerce China DangDang (NYSE:DANG). Stock price for the company went from $7 to over $10 in just one month making it vulnerable to profit taking. Earnings related market sentiment will ultimately drive Renren Inc. (NYSE:RENN) and E Commerce China DangDang (NYSE:DANG) today. Sleepy Feihe International (NYSE:ADY) was trading in a narrow range but moved $.5 lately, a quite unusual uptick.

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There are no oversold China stocks today. VisionChina Media (NASDAQ:VISN) is not considered oversold because it hasn't approached theoretical lows yet. The same is true to ReneSola Ltd. (NYSE:SOL) and China Gerui Advanced Material (NASDAQ:CHOP).

Citi Telecom (NASDAQ:CTEL) has been very volatile in the past three trading days and fell hard on large volume. This indicates a bumpy road ahead.

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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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