While City Telecom (NASDAQ:CTEL) and China Natural Resources (NASDAQ:CHNR) have already reached theoretical lows, the sudden drop in the price of Petrochina (NYSE:PTR) suggests this large cap stock is ready to turn around - as soon as the price of oil stabilizes. Vanceinfo Technologies (NYSE:VIT) went from over the trading envelope to well below it just an a short 5 days, following weak first three months results. Trina Solar (NYSE:TSL) is a solar play that is sensitive to the price of oil - but current position suggests the stock is ready to make a comeback later this week.
China Automotive Systems (NASDAQ:CAAS) or Sutor Technology (NASDAQ:SUTR) are not horrible oversold but are worth paying attention to. Melco Crown Entertainment (NASDAQ:MPEL) is another volatile stock that is either overbought or oversold... Expect some trading opportunities to arise with this China play.
On the overbought end of the China stock universe, watch out for overbought Spreadtrum Communications (NASAQ:SPRD). The stock jumped over 30% for the week - part of it is strong earnings part is just overall strength. But with such a stellar performance, profit taking is going to be an issue.
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.