Shares of China Mobile (CHL), the largest mobile carrier in the world, rose $1.25 or 2.37% on Thursday but indicators show that the stock is overbought and is ready for a pull back. On the same token, shares of Sina Corp. (SINA) seem to fell too much too fast and thus a turnaround is possible.
Stocks with momentum include Life Insurance (LFC), Yanzhou Coal (YZC), and American Oriental (AOB). While NetEase (NTES) is leveling off, the stock is fundamentally solid and may resume going higher following two days to breathing.
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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