(Sept. 9, 2009 - Chinavestor) Tuesday was all about solar stocks. The whole sector caught fire on hopes that the sector has bottomed out. Long time oversold JA Solar (NASDAQ:JASO) advanced 15.63% Tuesday, making it the second best solar stock for the day behind SolarFun Holdings (NASDAQ:SOLF). According to the overbought-oversold indicator, Suntech (NYSE:STP), the largest Chinese solar company, just made it back to her trading range. But notice, Suntech (STP) is still just at the low end of the range, indicating more upside potential for the short term.
Most oversold China stock list
Looking at the most overbought China stock list, two solar companies are on the list: LDK Solar (NYSE:LDK) and Solarfun Power (NASDAQ:SOLF). But despite LDK's advance of 14.54% just on Tuesday, the second largest Chinese solar company by market value is still far from overbought. The same is true for Solarfun Power (NASDAQ:SOLF); despite a staggering 20.74% advance in one day, the stock just made it back to her normal trading range. Looking at the solar sector from a technical point of view, there is more to the upside despite big advances. But keep your eye on the overbought/oversold report in the upcoming days and make sure you quit Chinese solar stocks before they get overbought.
Most overbought China stock list
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.