(Sept. 21, 2009 - Chinavestor)
Baidu.com (NASDAQ:BIDU), is the most overbought China stock at the moment and thus is ready for a pull back. WuXi Pharma (NYSE:WX) is just as much in the danger zone. And while Sohu.com (NASDAQ:SOHU), China Life Insurance (NYSE:LFC), AsiaInfo (NASDAQ:ASIA) and NetEase.com (NASDAQ:NTES) are not overbought yet, they are susceptible for a pull back if market sentiment sours.
Most overbought China stock list
Looking at the most oversold China stock universe, Focus Media Holdings (NASDAQ:FMCN) is just screaming off the chart. The stock is back to where it was before August 25, the infamous big jump, some small cap Chinese ADRs tend to do. Linktone Ltd. (NASDAQ:LTON) is coming off the extreme oversold position. But wait until August 25 when the company will report second quarter earnings. This is when we'll get a better understanding about where the stock is heading. If you're a risk taker, might want to consider snapping up some LTON shares until it's oversold. A pop up is always a possibility, and with earnings on the calendar, the catalyst is present.
Most oversold 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.