May 10, 2011 (Chinavestor) The number of China stock extremes fell from Monday as the following two charts testify. SouFun Holdings (NASDAQ:SFUN) is trading closest to theoretical highs but is far from overbought. Mindray Medical (NYSE:MR) reported a 24% top line growth, sending its shares higher before the open. More upside is possible for this Chinese medical equipment maker. VisionChina Media (NASDAQ:VISN) and China TechFaith Wireless (NASDAQ:CNTF) show sound momentum. But Chinese solar makers are in trouble, according to the oversold China stocks screen. LDK Solar (NYSE:LDK) is oversold but JA Solar (NASDAQ:JASO) and ReneSola Ltd. (NYSE:SOL) are here to testify that investors have sold off the whole sector. Chinese oil major Petrochina (NYSE:PTR) remains oversold, or is ready to bounce back up say the least. Earnings continue to drive Chinese stocks, according to the overbought chart. Mindray Medical (NYSE:MR) has been advancing before earnings, but more upside is possible today. The company reaffirmed 2011 guidance while reporting a superb top line growth.
VisionChina Media (NASDAQ:VISN) jumped last Friday following a strong 2011 first quarter. The stock took a breather on Monday, leaving more room to the upside for the rest of the week.
China TechFaith Wireless (NASDAQ:CNTF) is trading at 52 week highs with a sound momentum going forward. Despite recent gains, more upside is possible.
LDK Solar (NYSE:LDK) has reached theoretical low and is considered oversold. But weakness is not limited to this company alone, JA Solar (NASDAQ:JASO) and ReneSola Ltd. (NYSE:SOL) are also among the 25 most oversold Chinese stocks this morning.
Petrochina Co. Ltd. (NYSE:PTR) advanced a mere 1.3% on Monday but is ready for a comeback. The stock has more upside potential than downside risk. This technical situation is similar to that of Sinopec (NYSE:SNP), Asia's largest refiner by volume.
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.