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SNP, CHL, GSH are oversold on Fri

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money_4 June 7, 2013 (Chinavestor) China XD Plastics (NASDAQ:CXDC) is on top of the China ADR overbought chart. But the stock is still far from theoretical highs and is not considered overbought. Same is true for The9 Ltd. (NASDAQ:NCTY) and 51job Inc. (NASDAQ:JOBS). See chart for details.

ADR_OB_20130607

Upside potential exceeds downside risk for China Mobile (NYSE:CHL), Sinopec (NYSE:SNP) and Guangshen Rail (NYSE:GSH) according to the following chart.

ADR_OS_20130607

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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