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SINA is oversold, ready for comeback

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bull_bear3 June 10, 2011 (Chinavestor) Baidu.com Inc. (NASDAQ:BIDU) and Sohu.com (NASDAQ:SOHU) bounced off the oversold position on Thursday. But Sina Corp. (NASDAQ:SINA) continued to fell, making it the most oversold China stock of the day. Spreadtrum Communications (NASDAQ:SPRD), China Fiance Online (NASDAQ:JRJC) and China Housing & Land Development (NASDAQ:CHLN) are similarly oversold. Outlook is uncertain for Shanda Interactive (NASDAQ:SNDA) though.

Share price of Sina Corp. (NASDAQ:SINA) fell over 27% since last Friday and is a buying opportunity, according to the oversold monitor below. The stock has reached theoretical lows and has limited downside from here.

Remember, Baidu.com Inc. (NASDAQ:BIDU) was in the same spot just yesterday morning before advancing 2.1% for the day. Similarly to BIDU, Sohu.com Inc. (NASDAQ:SOHU) rose 3.5% after reaching an extreme oversold position the same day.

The oversold monitor, and every technical indicator in fact, work best for large, liquid stocks like Baidu.com Inc. (NASDAQ:BIDU). This implies that while Spreadtrum Communications (NASDAQ:SPRD), China Fiance Online (NASDAQ:JRJC) and China Housing & Land Development (NASDAQ:CHLN) are all oversold to the extremes, their chance of a turnaround is slimmer.

The second largest Chinese online game developer, Shanda Interactive (NASDAQ:SNDA), is also among the 25 most oversold Chinese stocks. But the stock hasn't reached theoretical lows yet, suggesting more downside is possible.

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despite a positive market day on Thursday, there is no overbought China stocks to speak of at the moment. Synutra Int. (NASDAQ:SYUT) advanced over 10% but that was not enough no make it to the extremes.

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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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