March 30, 2011 (Chinavestor) There are a lot of developing stories on the overbought monitor this morning. One of the most liquid stock, Sina Corp. (NASDAQ:SINA), continued to show strength. China's largest oil producer, Petrochina Co. Ltd. (NYSE:PTR) is looking just as good on the overbought screen this morning. NetEase.com Inc. (NASDAQ:NTES) is another trading stock with sustainable momentum, according to the screen below. But Huaneng Power Int. (NYSE:HNP), China's largest independent power producer, is clearly trading out of its trading range and is susceptible to a pull back.
Fuqi International (PINKS:FUQI) and Advanced Battery Technologies, Inc.(NASDAQ:ABAT) dominate the oversold screen. The first one just got booted from the NASDAQ and the second is just trying to find a bottom.
But today is the day for momentum stocks from the overbought screen. Noah Education Holding (NYSE:NED) is trading closest to theoretical highs but there is more to overbought than just the position of the tip of the arrow. Trading volume counts, catapulting Sina Corp. (NASDAQ:SINA) on the top of our list today. Despite recent advances, the stock is not overbought!
Petrochina Co. Ltd. (NYSE:PTR) is another stock investors have to follow.The stock is looking just as good as Sina Corp. (NASDAQ:SINA), according to the overbought screen below. High oil prices are behind latest rally but more upside is possible.
Downside risk is minimal for NetEase.com Inc. (NASDAQ:NTES) while upside potential exists. Stocks with large volume are most likely to benefit from today's jobs report.
But Huaneng Power International (NYSE:HNP) is looking vulnerable on the chart below. Expect some weakness to hit the ADR today.
Advanced Battery Technologies, Inc.(NASDAQ:ABAT) is oversold but not to extremes yet. More downside is possible. This is the last appearance of FUQI Int. (PINKS:FUQI) for the stock is gone from the NASDAQ to the pinks, a market we don't follow.
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.