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Telcos, real estate, online stocks at extremes

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watch_4 August 23, 2011 (Chinavestor) Upside is not limited by technicals for Qihoo 360 Technology (NYSE:QIHU), China Mobile (NYSE:CHL) or China XD Plastics (NASDAQ:CXDC) either. Investors have appetite for real estate stocks according to the overbought China stocks list. Xinyuan Real Estate (NYSE:XIN) and E-House Holdings (NYSE:EJ) have all upside potential left. China Telecom (NYSE:CHA) and China Unicom (NYSE:CHU) are oversold and are ready to bounce back up. Changyou.com Inc. (NASDAQ:CYOU) and Shanda Interactive (NASDAQ:SNDA) are not oversold but have been hurting lately, something that might change as more earnings come up from theĀ  sector later this week. Vancinfo Technology (NYSE:VIT) fell hard and is oversold but when fundamentals fail stock, they tend to find it hard to get back up.

Back to the overbought screen. Qihoo 360 Technology (NYSE:QIHU) is trading closest to theoretical highs but hasn't reached it yet. This implies more upside is possible.

China Mobile (NYSE:CHL), the largest mobile carrier in China, has upside potential as well despite a 5% plus advance in the past three days.

China XD Plastics (NASDAQ:CXDC) is looking good on the overbought chart as well. General Steel (NYSE:GSI), another stock that displayed a meteoric rise last week, fell back hard on low volume. Investors tend to go for stocks that have enough volume to create exit opportunities when it comes to that.

The unusual advance of Xinyuan Real Estate (NYSE:XIN) and E-House Holdings (NYSE:EJ) are explained by funadmentals. Both compnies reported last week and surprised investors to the upside. Despite some gains, more upside is possible, according to the overbought chart.

OB_2011823

Chinese telecommunication stocks fell to lows before earnings. China Telecom (NYSE:CHA) just announced last night and is expected to bounce back up. The stock is the most oversold stock with significant upside potential. China Unicom (NYSE:CHU) is expected to rise on sector strength. The stock is almost oversold suggesting downside risk is minimal at this point.

Online gamers have upside potential as well, according to the oversold chart below. Changyou.com Inc. (NASDAQ:CYOU) and Shanda Interactive (NASDAQ:SNDA) are not oversold but their upside potential exceeds downside risk.

OS_2011823

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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