July 21, 2010 (Chinavestor) Extended rally is expected to cap further gains for NetEase.com Inc. (NASDAQ:NTES), China Finance Online (NASDAQ:JRJC). Chinese solar stocks are not overbought yet, suggesting more upside is possible for Trina Solar (NYSE:TSL) and Solarfun Power Holdings (NASDAQ:SOLF). Pullback is not imminent for Sina Corp. (NASDAQ:SINA) and Vision China Media (NASDAQ:VISN) according to the overbought chart below.China Eastern Airline (NYSE:CEA) is not overbought despite a strong showing for the week.
NetEase.com Inc. (NASDAQ:NTES) rose a mere 2.74 percent on Tuesday but even that is unusual lately for the stock, according to the overbought calculator. The stock has been approaching theoretical highs and is trading above its normal trading range, indications that downside risk exceeds upside potential.
China Finance Online (NASDAQ:JRJC) is a small cap, low volume NASDAQ play that is hard to predict by using technical indicators. But the overbought chart suggests upside is limited for JRJC in the short run.
Sina Corp. (NASDAQ:SINA) is looking good on Wednesday morning from a technical point of view. The stock hasn't approached theoretical highs yet, leaving more room to the upside.
Chinese solar stocks have seen strong interest as the earnings season approaches. The sector has started to recover from 2009 lows; shipments, margins and profits have been on the rise in the last two earnings seasons. Trina Solar (NYSE:TSL) is trading above $23, a nice run from $17.3 at the end of June. Despite the rally more upside is possible, according to the overbought chart. Solarfun Power (NASDAQ:SOLF) looks more vulnerable than TSL though upside is possible for the stock as well.
VisionChina Media (NASDAQ:VISN) jumped 13.7 percent on Tuesday but is not overbought yet...
China Eastern Airline (NYSE:CEA) is looking good ahead the open. More upside is likely to come for China's second largest carrier.
City Telecom (NASDAQ:CTEL) is the most oversold China stock at the moment but more downside is possible. Jinpan International (NASDAQ:JST) may have bottomed out but there is no sign of imminent bounce back.
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.