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Overbought China stocks with more upside

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advance2 April 20, 2011 (Chinavestor) The overbought monitor is full of action on Wednesday with GigaMedia Ltd. (NASDAQ:GIGM) stealing the story.  The advance looks unstoppable for Sina Corp. (NASDAQ:SINA), at least for the short run. China Fire & Security Group (NASDAQ:CFSG) looks similar to CDC Corp. (NASDAQ:CHINA) on the overbought screen below. Perfect World (NASDAQ:PWRD), Melco Crown Entertainment (NASDAQ:MPEL) and Ctrip.com Inc. (NASDAQ:CTRP) are stocks with ample with more upside potential. Ku6 Media Co. (NASDAQ:KUTV), formerly known as Hurray! Holdings is on fire but that might change quickly should market sentiment sour. With only one stock, AgFeed Industries (NASDAQ:FEED), stocking out on the oversold screen, investors should pay attention to stocks on the overbought chart below on Wednesday.

GigaMedia Ltd. (NASDAQ:GIGM) is trading the closest to theoretical highs but is not there yet. This implies the stock, along with Focus Media Holdings (NASDAQ:FMCN), has more upside left.

Investors have to wonder where the ceiling might be for Sina Corp. (NASDAQ:SINA). Despite braking new records for most of April, more upside looks possible.

China Fire & Security Group (NASDAQ:CFSG) and CDC Corp. (NASDAQ:CHINA) went from the low end of their trading envelope to the high end in a short period of time. While CFSG remains a low volume stock and renders the overbought monitor less accurate, CDC Corp. (NASDAQ:CHINA) has real volume. Considering the huge uptick last Thursday, CDC Corp. (NASDAQ:CHINA) has a much more sustainable growth path than China Fire & Security Group (NASDAQ:CFSG).

Momentum of the online game sector carried over to Perfect World (NASDAQ:PWRD) on Tuesday. Shanda Games (NASDAQ:GAME) and Shanda Interactive (NASDAQ:SNDA) jumped 17% earlier the week, jump starting Giant Interactive (NYSE:GA) first and PWRD second. Despite significant increases, more upside is possible for the sector.

Trading stock Melco Crown Entrtainment (NASDAQ:MPEL) is looking good along with Ctrip.com Inc. (NASDAQ:CTRP). Both stocks are far from theoretical highs and have ample volume.

OB_2011420

There isn't any oversold stocks to speak of at the moment. Despite heavy losses, AgFeed Industries (NASDAQ:FEED) has more downside left, according to the oversold China stock screen below.

OS_2011420

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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