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CBEH and other stock extremes

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decline March 29, 2011 (Chinavestor) GigaMedia Limited (NASDAQ:GIGM), 3SBio Inc. (NASDAQ:SSRX), and China TechFaith Wireless (NASDAQ:CNTF) are overbought, according to the chart below. Sina Corp. (NASDAQ:SINA) is another stock with unusual volume and is subject to profit taking.

Stocks of interest from the oversold screen include China Integrated Energy (NASDAQ:CBEH), Gushan Environmental Energy (NYSE:GU), Advanced Battery (NASDAQ:ABAT) and FUQI International (NASDAQ:FUQI).

Downside risk exceeds upside potential for GigaMedia Limited (NASDAQ:GIGM) as the stock has reached theoretical highs. China TechFaith Wireless (NASDAQ:CNTF) has advanced too much, too fast, according to the overbought indicator. Sina Corp. (NASDAQ:SINA) is trading at 52 week highs and might succumb to profit taking, given the fast pace of advance.

OB_2011329

Representative of the Chinese bio-diesel industry are in trouble as China Integrated Energy (NASDAQ:CBEH) fell 28% on Monday. Gushan Environmental Energy (NYSE:GU), another bio-diesel producer, is on the oversold screen as it followed CBEH lower for the day.

Advanced Battery (NASDAQ:ABAT) made a comeback after falling apart on Monday yet is in the danger zone, according to the oversold screen.

FUQI International (NASDAQ:FUQI) was caught in the "book cooing" allegations earlier and remains sensitive to CBEH development.

OS_2011329

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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