July 7, 2011 (Chinavestor) China Mobile (NYSE:CHL) took a breather on Wednesday after getting dangerously close to theoretical highs. But the stock is still considered overbought, leaving little room to the upside. Melco Crown entertainment (NASDAQ:MPEL 0s a sound trading stock that follows market sentiment. With index futures pointing to a higher open, MPEL is looking good. Sinopec (NYSE:SNP), China's largest refiner, has momentum. NASDAQ listed internet stocks are embracing the earnings season. 51job inc. (NASDAQ:JOBS) has been trading with a positive bias just as Home Inns & Hotels Management (NASDAQ:HMIN) has. Baidu.com Inc. (NASDAQ:BIDU) is back on the overbought screen albeit has lot of upside left. China Eastern Airlines (NYSE:CEA) and China Life Insurance (NYSE:LFC) are among the best looking large cap Chinese ADRs at the moment.
China Mobile (NYSE:CHL) is considered overbought and is expected to continue to cool off. Melco Crown Entertainment (NASDAQ:MPEL) is similarly overbought but hasn't reached theoretical highs yet. Given its trading characteristics, MEPL looks to possess more upside potential.
Sinopec (NYSE:SNP) is similar to China Life Insurance (NYSE:LFC) and China Eastern Airlines (NYSE:CEA) from a technical point of view. Despite latest advances, upside potential is there.
Internet stocks have been advancing ahead the earnings season. Baidu.com Inc. (NASDAQ:BIDU) is looking good just as 51job Inc. (NASDAQ:JOBS) is. home Inns & hotels Management (NASDAQ:HMIN) is not an internet stock but has similar trading characteristics to those. These stocks have more upside potential than downside risk at this time.
Despite a lackluster market day on Wednesday, the oversold monitor presents no stock extremes.
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.