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Is solar rally over yet?

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solar3 December 12, 2011 (Chinavestor) Qihoo 360 Technology (NYSE:QIHU) may trade closest to theoretical highs but it's Chinese solar stocks that had a blast last week. Suntech Power (NYSE:STP) took a breather on Friday and looks ready to for more upside on Monday. LDK Solar (NYSE:LDK) is just as good after a break on Friday. Yingli Green Energy (NYSE:YGE) and Trina Solar (NYSE:TSL) are also close to the top of the overbought chart. NetEase.com Inc. (NASDAQ:NTES) is the largest Chinese internet stock on the overbought chart after a 2.5% run-up last Friday. The stock is trading below $48, still within its normal trading range, offering a lot more upside. There is not much to see by scrolling down to the oversold chart for no stock extremes is to be found in there today.

Chinese solar stocks recovered late November early December as outlook improved for the sector. It's not that European demand is back on strong but rather that a quick meltdown of that export market has stopped. Oversold, undervalued solar stocks made a strong comeback with more potential upside, according to the overbought chart. Suntech Power (NYSE:STP) is trading closest to theoretical highs but it's still within its trading envelope. That suggests the rally hasn't been exhausted yet.

LDK Solar (NYSE:LDK) is trading way above its trading range but hasn't reached thoretical highs either. This is a positive sign going forward as well.

But Yingli Green Energy (NYSE:YGE) and Train Solar (NYSE:TSL) are those solar plays that look the best from a technical point of view. Both stocks are trading close to normal trading ranges and are off theoretical highs. These stocks have a lot more to offer should the market continue to provide support for the sector.

Qihoo 360 Technologies (NYSE:QIHU) is on top of the overbought chart but is not necessarily at stock extremes. The stock hasn't reached theoretical highs, leaving more room to the upside.

Chinese internet giant NetEase.com Inc. (NASDAQNTES) made it to the bottom of the overbought monitor. The stock is still below $50, a resistance level it can easily challenge, according to the overbought monitor.

OB_20111212

There are no oversold stock extremes on the oversold end of the China stock universe today. China Nepstar Chain Drugstore (NYSE:NPD) fell unusually hard but there is lot more downside risk left. Investors have to exercise caution going forward with the stock.

OS_20111212

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.

aa_OBOS_expl_2weeks


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