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Overbought China stock list gets dry

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run June 7, 2011 (Chinavestor) Shares of Sohu.com Inc. (NASDAQ:SOHU) became oversold and are ready for a comeback, according to the oversold monitor. Other large volume stocks of interest include Shanda Interactive (NASDAQ:SNDA) and 51job Inc. (NASDAQ:JOBS).  A technical rebound is the most likely scenario for China-Biotics (NASDAQ:CHBT), Origin Agritech (NASDAQ:SEED) and Vision China Media (NASDAQ:VISN).

Stocks approaching theoretical lows tend to bottom out, as is the case with Sohu.com Inc. (NASDAQ:SOHU) this morning. Shanda Interactive (NASDAQ:SNDA) is almost as oversold as Sohu and 51job Inc. (NASDAQ:JOBS). The technical weakness of 51job Inc. (NASDAQ:JOBS) is even more surprising given the sound fundamentals the company demonstrated as late as the first quarter of this year.

While not trading at theoretical lows yet, the sudden fall in the stock price of China-Biotics (NASDAQ:CHBT), Origin Agritech (NASDAQ:SEED) and Vision China Media (NASDAQ:VISN) is worth paying attention. Risky traders might be able to reap profits should market sentiment support a rebound.

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Except for a tender offer instilled ATV surge, there is no overbought China stock at the moment. But that might change should market sentiment improve. For now, we only have stocks with some momentum, according to the overbought screen below.

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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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