May 10, 2012 (Chinavestor) China stock investors got a couple of big movers lately. The overbought monitor picked up the unusual advance of CNinsure (NASDAQ:CISG) and Spreadtrum Comm. (NASDAQ:SPRD). While SPRD advanced on sound fundamentals, the surge in CISG's price is different. This suggests CISG is in jeopardy going forward.
Advances of China Mobile (NYSE:CHL) and New Oriental Education (NYSE:EDU) are also well supported and neither of these stocks are trading at extreme overbought positions.
China Automotive Systems (NASDAQ:CAAS) is oversold and the stock is expected to bounce back up. Yet the magnitude of such uptick is uncertain at best.
Baidu.com Inc. (NASDAQ:BIDU) is also trading close to theoretical lows but is still has some room left to the downside. The stock may bottom out around current price range.
For additional oversold stoks, visit the chart below.
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.