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Oversold XIN, LONG and more

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advance_8 June 5, 2012 (Chinavestor) Investors don't have to go far to find oversold stock extremes among US listed Chinese stocks. eLong Inc. (NASDAQ:LONG) and Xinyuan Real Estate (NYSE:XIN) are oversold to the extremes, making a case for a quick turnaround. Melco Crown Entertainment (NASDAQ:MPEL) is trading well below its trading envelope, making investors wonder what's going to happen next. But Chinese solar stocks are stuck in the rut, according to the chart below.


 

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There are no overbought China stocks at the moment. Huaneng Power International (NYSE:HNP) is trading closest to theoretical highs but is far from an extreme overbought position. More upside is possible for Silvercorp Metals (NYSE:SVM) as well as for Youku.com Int. (NYSE:YOKU) despite yesterday's spike.


OB_20120605


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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