Earnings and outlook helped lift Shanda Interactive (NASDAQ:SNDA) on Wednesday but that was nothing compared to its online game unit, Shanda Games (NASDAQ:GAME). China's second largest online game operator and developer surged 18% on Wednesday on earnings and valuation. While this surge is highly unusual and has put the stock way above its normal trading range, more upside is possible, according to the overbought chart.
China TechFaith Wireless (NASDAQ:CNTF) looks just as vulnerable on the overbought chart but the good news is that both companies advanced on sound fundamentals. This in turn suggests more upside is possible.
This was the case with Ata Inc. (NASDAQ:ATAI), a company that beat estimates and guided higher. A major analyst upgrade helped it to keep momentum even when the overbought chart suggested differently.
Silvercorp Metals (NYSE:SVM) is enjoying a ride on high precious metal prices but that may not be able to keep it moving on Thursday.
Mindray Medical (NYSE:MR) is a value stock that reported excellent quarterly and yearly results, yet failed to appreciate earlier the week. more upside is possible for this mid cap Chinese medical equipment maker.
The overbought chart pricked up momentum of Petrochina Co. Ltd. (NYSE:PTR). When price of oil is above $100/barrel, it's hard to argue that oil companies won't benefit.
3SBio (NASDAQ:SSRX) remains oversold according to the chart below. Notable stocks on the screen include AirMedia Group (NASDAQ:AMCN) and ChinaCast Education (NASDAQ:CAST). While SSRX is likely to bounce back u0p sooner than later, CAST has more downside risk left.
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.