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Solar stocks suffer, BIDU is back

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bull_bear_3 August 3, 2012 (Chinavestor) Suntech Power (NYSE:STP) is on top of the oversold chart this morning. Yet Telestone Technologies (NASDAQ:TSTC), Trina Solar (NYSE:TSL) and NetEase.com Inc. (NASDAQ:NTES) just as oversold. Chinese solar stocks took a hit after Trina Solar (NYSE:TSL) hinted a significant top line decline while Suntech (NYSE:STP) reported a net loss of over $600 million due to a fraud.

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There are no overbought China stocks at the moment. Momentum has dried up for China Telecom (NYSE:CHA) and China Eastern Airlines (NYSE:CEA). Baidu.com Inc. (NASDAQ:BIDU) swung back to the top of its trading range but more upside is possible.

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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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