November 29, 2010 (Chinavestor) The overbought monitor picked up the unusual move of Synutra International (NASDAQ:SYUT) from last Friday. China Infrastructure Investment Corp (NASDAQ:CIIC) and China Digital TV Holding Co., Ltd (NYSE:STV) show momentum but are much less persuasive.
With markets on the retreat last week, the overbought monitor has not much to show for. Synutra International (NASDAQ:SYUT) is an exception after a 17.08% run last Friday. Despite the sizable lift, the stock is not overbought as the following chart suggests.
It is hard to argue that most Chinese stocks were oversold. ReneSola ltd. (NYSE:SOL) is the closest to theoretical lows and is near the bottom, suggest the chart below. JA Solar (NASDAQ:JASO) is next on the oversold chart from the solar stock universe. But the picture is not much better for telecoms. China Unicom (NYSE:CHU), the second largest mobile carrier is just as oversold as China Telecom (NYSE:CHA), the largest fixed line carrier. Both stock seems to trade close to theoretical lows suggesting the bottom is near.
WSP Holdings (NYSE:WH) experienced the biggest loss of momentum last week. Disappointing earnings and a weak balance sheet are behind the fall. Despite losses more downside is likely.
Mindray Medical (NYSE:MR) continues to deteriorate but investors tend to forget that this company is for real. More downside is possible for the short run but we remain bullish for the mid term.
Vimicro International Corporation (NASDAQ:VIMC) has been deteriorating for months but the negative cycle may not break anytime soon, according to the oversold 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.