August 6, 2010 (Chinavestor) Robust earnings from Sina Corp. (NASDAQ:SINA) helped it to creep higher on Thursday but the stock is approaching theoretical highs and is vulnerable. Shanda Games (NASDAQ:GAME) made a V-shaped recovery in July and continues to outperform, but again, downside risk is going to exceed upside potential soon. China Digital TV Holding (NYSE:STV) is a less liquid China play and is stretching too thin, according to the overbought monitor below. Investors will have to keep eye on Shanda Interactive (NASDAQ:SNDA) and Rino International (NASDAQ:RINO) in addition.
China Sunergy (NASDAQ:CSUN) has just reported earnings and has been accumulating momentum - another potentially explosive stock.
The oversold end of the China stock universe is lame- expect for China Architectural Engineering (NASDAQ:CAEI). The stock fell 20 percent in a month but is not oversold yet, according to the monitor below.
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.