April 7, 2011 (Chinavestor) New Oriental Education & Technology Group (NYSE:EDU) stepped up on the overbought screen from a day before. UTStarcom (NASDAQ:UTSI) is another stock in a vulnerable position, according to the chart below. Downside risk is on the rise for Home Inns & Hotels Management (NASDAQ:HMIN) and for Petrochina Co. Ltd. (NYSE:PTR) as well.
Low trading volume renders the overbought indicator useless for China TransInfo Technology Corp (NASDAQ:CTFO) and Noah Education (NYSE:NED).
We argued just yesterday that short term outlook is bright for New Oriental Education (NYSE:DU). We wrote that "New Oriental Education (NYSE:EDU) made a successful; comeback after reporting a soft 2010 fourth quarter. The largest Chinese education firm on the NYSE has sustainable momentum, according to the overbought chart below."
But that is about to change for the stock advanced too much, too fast, according to the latest chart below.
UTStarcom (NASDAQ:UTSI) is susceptible to profit taking as the following chart suggests.
Home Inns & Hotels Management (NASDAQ:HMIN) is trading at its best for 2011 at the moment. While the stock price isn't far from the trading envelope, investors have to exercise caution going forward.
high oil prices hepled Petrochina Co. Ltd. (NYSE:PTR), but that might change as situation in the Middle East winds down. The stock is in a vulnerable position but a dramatic collapse is out of question.
There is no change on the oversold screen from yesterday.Puda Coal (NASDAQ:PUDA) has more downside risk left but Nam Tai Electronics (NYSE:NTE) may bounce back off.
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.