September 8, 2010 (Chinavestor) WSP Holdings (NYSE:WH) jumped 28 percent on Tuesday and is off the overbought chart, as expected. China BAK Battery (NASDAQ:CBAK) didn't go unnoticed after a 10.28 percent increase either. Both stocks are overbought in the danger zone. Wonder Auto Technology (NASDAQ:WATG) and China Medical Technology (NASDAQ:CMED) have advanced too fast, too much - according to the chart below. BMP Sunstone Corp. (NASDAQ:BJGP) rose over 18 percent in the last five trading sessions, a long stretch, but hasn't approached theoretical highs yet. Nevertheless the move is unusual and call for attention.
China Sky One Medical, Inc.(NASDAQ:CSKI) and Chain Mobile (NYSE:CHL) call for action on the oversold screen today.
But again, it's WSP Holdings (NYSE:WH) that is way out of the chart after a sudden 28 percent rise on Tuesday. The stock is out of the range and is clearly overbought. China BAK Battery (NASDAQ:CBAK) tacked on more than 10 percent on Tuesday, qualifying it to the top of the overbought indicator. Penny stock Xinhua Finance Media Limited (ADR) (NASDAQ:XSEL) rose more than CBAK in percentage terms but that's due to a low volume and to extreme low price.
A long stretch in Wonder Auto Technology (NASDAQ:WATG) calls for attention but the stock rallied after guiding higher and volume was strong. Another plus for WATG is that current stock price hasn't touched theoretical highs yet. But upside potential looks increasingly limited for the short term.
High volume accompanying the rally of China Medical Technology (NASDAQ:CMED) suggest strong money flows will keep it from tumbling, nevertheless upside for the short run looks limited for this stock as well.
Gradual increase in the stock price of BMP Sunstone Corp. (NASDAQ:BJGP) is encouraging, plus the stock is far from theoretical highs. The next couple of days will be key in determining direction for next week.
Disappoinign financials sent China Sky One Medical, Inc.(NASDAQ:CSKI) tumbling over 30 percent in the Tuesday. While the move is huge, the stock has more diownside left, according to the oversold chart below. Any bounce back might be just a dead cat bounce, short term improvment doesn't seem supported.
China Mobile (NYSE:CHL) is suffering from a Vodaphone's plan to dump as much as 3.2 percent of CHL shares. Vodaphone is raising capital ahead of clashing with Indian tax authorities following the controlling stake purchase of India's largest mobile network from Hatchinson years earlier. Short term outlook for China Mobile (NYSE:CHL) looks dim.
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.