Back to the overbought monitor. ChinaEdu Corporation (NASDAQ:CEDU) leads the overbought China stock universe but was overbought Monday morning and fell for the day. The stock is a wild card at this point.
China Digital TV Holding Co., Ltd. (NYSE:STV) rose over 7% on Monday following sound earnings report and a cash dividend. Despite the sizable lift on Monday, more upside is quite possible for China Digital.
VanceInfo Technologies Inc.(NYSE:VIT) rose 5.8% stepping out of its trading envelope. Despite the momentum, there is no proof real support for the stock thus downside risk is certainly an issue.
China Infrastructure Investment Corp (NASDAQ:CIIC) is another stock that advanced with low volume. The stock is far from overbought with not convincing firepower for more upside.
Spreadtrum Communications, Inc (NASDAQ:SPRD) is the stock to watch. The stock had its ups and downs but current advance looks more promising than the ones before. Tuesday is a potentially good day for SPRD investors.
E-House Holdings (NYSE:EJ) is the most oversold China ADr at the moment but that doesn't mean the stock is overbought from a technical point of view. Weak earnings has sent the stock on the slide with no clear indication where the bottom might be. More downside is possible.
Suntech Power (NYSE:STP) has experienced some of the most dramatic declines lately. The whole solar sector is under pressure following a Credit Suisse industry downgrade but that might not be enough to keep it under water for too long.
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.