Looking at the Overbought/Oversold indicator Tuesday morning before the bell, Shanda Interactive (NASDAQ:SNDA) is the most oversold China stock, an indication of a bullish trend. We pointed out that Shanda gains 10% following five six days of straight losses, on average. Though Shanda is up three days in a row since last Thursday, the total gain is far from the expected 10% yet. As the following most oversold China stock list testifies, there is not any oversold China ADR at the moment.
Looking a the most over bought China stock list, lot of China stocks are in the danger zone. Shares of Huaneng Power (NYSE:HNP), Sinovac (AMEX:SVA) and HSBC Plc. (NYSE:HBC) are all overbought and trading at theoretical highs. Expect them to do poorly on Tuesday morning.
China stocks that jumped big relative to their trading characteristics include eLong (NASDAQ:LONG), Sinopec Shanghai Petrochemical (NYSE:SHI), Ctrip.com (NASDAQ:CTRP). These stocks may keep going but you have to exercise caution in the upcoming days.
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.