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Telecoms roll but solar stocks suffer

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bull_bear_3 September 8, 2011 (Chinavestor) Harbin Electric (NASDAQ:HRBN) is trading at an extreme overbought position right now, warnings investors that the stock is subject to profit taking right now. China Fire & Security Group (NASDAQ:CFSG) and Agria Corp. (NYSE:GRO) are trading unusually high above their trading range, another warning sign. China Unicom (NYSE:CHU) has more room left to the upside similarly to larger rival China Mobile (NYSE:CHL), according to the overbought chart. Contrary to the telecom sector, Chinese solars are hurting. Trina Solar (NYSE:TSL) is among the 25 most oversold stocks along with Yingli Green Energy (NYSE:YGE) and LDK Solar (NYSE:LDK).

Investors of Harbin Electric (NASDAQ:HRBN) had a good reason to cheer for the stock rose another 7.8% on Wednesday and is up 25% in the last five trading days! But as expected, the stock is overbought and is expected to take a breather now.

It was Agria Corp. (NYSE:GRO) that was way overbought just yesterday. The stock fell on Wednesday proving the overbought indicator accurate. China Fire & Security Group (NASDAQ:CFSG) looks similar to GRO on the overbought chart but low volume renders technical indicators inaccurate. The overbought monitor can't give accurate prediction of the direction for CFGS at this point.

Large cap, relatively high volume China Unicom (NYSE:CHU) is looking good on the overbought monitor though. China Mobile (NYSE:CHL) is lacking momentum compared to its smaller counterpart.

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There are no oversold China stocks at the moment. One of the most significant changes from yesterday is the weakness of the solar sector. LDK Solar (NYSE:LDK) is the most oversold China play at the moment but investors lost money on Trina Solar (NYSE:TSL) and Yingli Green Energy (NYSE:YGE) in the last two weeks as well. Despite recent weakness, no bottom is spotted by the oversold monitor yet. 

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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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