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BIDU not oversold, MPEL in limbo

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banace_4 April 27, 2012 (Chinavestor) Small cap China Nepstar (NYSE:NPD) is on top of the overbought chart this morning. The stock has approached theoretical highs and is considered overbought.

Stocks on the move include Melco Crown Entertainment (NASDAQ:MEPL) as well as Jinpan International (NASDAQ:JST), China Housing and Land Development (NASDAQ:CHLN) and E-House Holdings (NYSE:EJ).

Melco Crown (NASDAQ:MPEL) and E-House (NYSE:EJ) have sufficient volume to keep the uptrend albeit MPEL is close to the danger zone. Downside risk is on the rise for this entertainment giant.

Petrochina Co. Ltd. (NYSE:PTR), China's largest oil producer, has momentum with no signs of a slow down. The company reported sound oil production and high oil prices for the first quarter, topping analyst estimates. Expect more upside from this company on Friday.

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Changyou.com Ltd. (NASDAQ:CYOU) remain on top of the oversold screen. The stock has been sliding for a month by now and investors wider where the bottom may just be. Based on the oversold monitor, the bottom is near! The stock may pop any time if the indicator below is accurate.

Baidu.com (NASDAQ:BIDU) slid over 10% this week and while is not oversold, the drop is certainly notable on the oversold screen. More downside is possible but is not necessary. The stock is trading at below its trading envelope and may just as well recover some of its lost ground.

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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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