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China stock extremes on the rise, Dec. 2

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wave1 December 2, 2010 (Chinavestor) A strong market day fills up the overbought China stock chart quick, as is the case this morning. Vanceinfo Technologies (NYSE:VIT) shines along with Sina Corp. (NASDAQ:SINA) but it's big mover Simcere Pharma (NYSE:SCR) and Linktone ltd. (NASDAQ:LTON) that rocked the boat. Chindex International, Inc (NASDAQ:CHDX) advanced 5% after a sleepy last three weeks, something that's out of the ordinary for the stock.

Talking about extraordinary. How about a 25% drop on lower guidance, like the case with A-Power Energy Generation Systems, Ltd (NASDAQ:APWR). The oversold indicator picked up the unusual fall of Ctrip.com Inc. (NASDAQ:CTRP) and Mindray Medical (NYSE:MR).

 

Back to the overbought monitor. Vanceinfo Technologies (NYSE:VIT) jumped 4.8% but has more upside left according to the overbought monitor below. Sina Corp. (NASDAQ:SINA) advanced just as much and is looking good, too. But investors have to exercise caution with Simcere Pharma (NYSE:SCR) for its too fast advance in the last two days. The stock halted on Wednesday but will be ready to go higher later the week, it seems. Linktone ltd. (NASDAQ:LTON) rocked the boat after a better than expected quarterly result. The stock jumped 18.4% but that looks excessive on the overbought screen below. Sleepy Chindex International, Inc (NASDAQ:CHDX) jumped 5.3% albeit volume was not that unusual. More upside is possible but that's not guaranteed.

OB_2010122

Weak fundamentals crushed A-Power Energy Generation Systems, Ltd (NASDAQ:APWR) on Wednesday. The company lowered guidance sending its stock down 25%. But the stock hasn't reached theoretical lows yet suggesting more downside is possible.

Internet based Ctrip.com Inc. (NASDAQ:CTRP) eroded 10% for the week and is picked up by the oversold monitor. The decline is highly unusual but the stock may have not bottomed out yet.

Mindray Medical (NYSE:MR) failed to gain traction on Wednesday but the bottom is near - suggests the oversold monitor.

OS_2010122

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.

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