Shares of NetEase (NTES) rose $1.5 or 4.58% on Thursday spurred by development that the company will host the WoW blockbuster title. But despite that significant jump NetEase still scores behind Asia's largest oil producerPetrochina (PTR) when it comes to technicals. Petrochina has maintained the strongest momentum among China ADRs during the week.
Looking at the Overbought/Oversold indicator for the day, China Mobile (CHL) and China Telecom (CHA) have gained momentum but it has been American Oriental (AOB) that advanced the most relative to its trading pattern. Baidu.com (BIDU) looks very solid, trading above its trading range but far from the theoretical high. This is a signal that BIDU has more upside potential.
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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