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Online gamers, internet stocks on the move

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buy-sell August 19, 2011 (Chinavestor) Previously overbought General Steel (NYSE:GSI) and China XD Plastics (NASDAQ:CXDC) pulled back on Thursday but Qihoo 360 Technology Co Ltd (NYSE:QIHU) was able to hang on to gains thanks to a solid quarterly report. Sina Corp. (NASDAQ:SINA) was able to pull the same on Thursday. Giant Interactive (NYSE:GA) presents one of the most striking change on the overbought chart, a stock that went from extreme overbought back to a no-change just in two days. NetEase.com Inc. (NASDAQ:NTES) is gone completely from the chart after a 9.35% dive. Weakness of the online game sector sent Changyou.com Inc. (NASDAQ:CYOU) all the way to an extreme oversold position. Shanda Games (NASDAQ:GAME), China's second largest online game developer and operator, is also among the 25 most oversold China stocks today along with its parent, Shanda Interactive (NASDAQ:SNDA).

Not surprisingly, there is not a single overbought China stock at the moment. Qihoo 360 Technology Co Ltd (NYSE:QIHU) is trading closest to theoretical highs but has more upside potential left. What makes this stock interesting is that it was able to advance over 5% on Thursday despite a heavy market sell-off.Sina Corp. (NASDAQ:SINA), while not on the overbought chart, is another example that strong earnings can help fight the market. Sina vs SOHU in 2011 Q2

There is a lot of downside risk left for General Steel (NYSE:GSI) despite a public on Thursday. GSI jumps 14% in last hour. What's next? The stock was overbought to an extreme after a record second quarter report earlier the week and was ready for a breather. China XD Plastics (NASDAQ:CXDC) is similar to GSI that it advanced to extremes after second quarter financials but has been pulling back along market lines. Smaller cap China stocks find it difficult to fight the market. CXDC Jumps 38%. What's next?

But even strong earnings were not good enough for NetEase.com Inc. (NASDAQ:NTES) to keep it from falling. The stock fell 9.35% on Thursday despite a record quarter. Can NTES go to $60? Investors seem to be hard on the online game sector in general. Giant Interactive (NYSE:GA) was the most striking overbought stock on Tuesday but that has all changed over the course of the week.

OB_2011819

And just how low online gamers can go is obvious on the oversold China stocks list. Changyou.com Inc. (NASDAQ:CYOU) is on top of the list after a 17.5% dive in the past three days. While not reported yet, investors don't seem to expect much from Shanda Games (NASDAQ:GAME), China's second largest online game developer and operator. Both this company and its parent, Shanda Interactive (NASDAQ:SNDA), are among the 25 most oversold stocks.

OS_2011819

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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