June 14, 2010 (Chinavestor) The overbought indicator suggests that upside is limited for China Unicom (NYSE:CHU) and Synutra International (NASDAQ:SYUT). Both stocks have advanced too fast in the last week and might take a breather.
Home Inns & Hotels Management (NASDAQ:HMIN) and Vimictro International (NASDAQ:VIMC) are ready to continue the really, based on the chart below.
Despite a strong performance last week, more of the good thing is possible for Ata Int. (NASDAQ:ATAI), CNinsure (NASDAQ:CISG), Sina Corp. (NASDAQ:SINA), China Mobile (NYSE:CHL), China Telecom (NYSE:CHA), Baidu.com (NASDAQ:BIDU) and Sinopec Shanghai Petrochemical (NYSE:SHI) as the overbought chart suggests.
The oversold end of the China stocks universe is balanced from a technical point of view. Investors might rediscover City Telecom (NASDAQ:CTEL) this week.
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.