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Overbought APWR has more upside

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think_1 December 28, 2010 (Chinavestor) Despite a 10% plus jump on Monday, A-Power Energy Generation Systems, Ltd. (NASDAQ:APWR) has more upside left, suggests the overbought monitor. Bio-diesel producer Gushan Environmental Energy (NYSE:GU) is clearly overbought and was off the chat below after a 39.06% jump on Monday. High oil prices and interest for the sector bodes well for China Integrated Energy, Inc. (NASDAQ:CBEH) as well. The rally may be over for China Housing & Land Development, Inc. (NASDAQ:CHLN) as the overbought chart testifies.

There hasn't been much change on the oversold monitor from last week - surprise Baidu.com Inc. (NASDAQ:BIDU) continues trading at a discount.

With most of the action taking place on the overbought end of the China stock universe, let's cherry-pick the big movers first. A-Power Energy Generation Systems, Ltd. (NASDAQ:APWR) surged over 10% on Monday but that move was just enough to move current price to the top of the trading envelope. This in turn suggests that the rally may not be over for the stock.

But it was Gushan Environmental Energy (NYSE:GU) that rocked the house on Monday with a 39% surge. There is no news behind the surge, it was pure bottom fishing. We have seen correlation between GU and China Integrated Energy, Inc. (NASDAQ:CBEH), another Chinese bio-dielesel producer. When oil is above $90/barrel, energy stocks typically do well.

But interest rate hike and subsequent fall of real estate stocks in China is going to hurt China Housing & Land Development, Inc. (NASDAQ:CHLN). The stock is far from overbought but may gave up most of the 6% gains it accumulated over the past few days.

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Telestone Technologies (NASDAQ:TSTC) continues to lead the oversold China stock uiverse. But that may not change as the stock has been trading in a narrow range. But Baidu.com Inc. (NASDAQ:BIDU) is still oversold, something that industry leaders don't do too often. BIDU has more upside potential than downside risk, the oversold chart suggests.

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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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