Downside risk exceeds upside potential for Sinopec (NYSE:SNP). Large cap stocks barely get overbought to extremes, suggesting SNP will have to cool off now.
AsiaInfo-Linkage (NASDAQ:ASIA) is different from Sinopec for two reasons. For one, the jump on Monday is earnings related and for two, the stock is not a large cap play but a volatile NASDAQ listing. Today's move is pushing the stock closer to the danger zone though more upside is possible. Nevertheless investors have to exercise caution from here on.
Changyou.com Ltd. (NASDAQ:CYOU) and Sohu.com Inc. (NASDAQ:CYOU) are far from overbought despite a sizable lift on Monday. Both stocks have more upside left, according to the overbought chart below.
Baidu.com Inc. (NASDAQ:BIDU) is not on the overbought chart yet but is making a move after reporting a gangbusters fourth quarter.
Spreadtrum Communications, Inc (NASDAQ:SPRD) is looking good despite a sizable gain.
China Fire & Security Group (NASDAQ:CFSG) became oversold after a 5% drop on Monday. But the rest of the stocks on the oversold screen are not trading at extremes yet, suggesting the slide may well continue for EDU, CRIC and the rest.
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.