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SOHU, ZNH and other oversold stocks

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burning_cash September 21, 2011 (Chinavestor) Sohu.com Inc. (NASDAQ:SOHU) fell 5.5% on Tuesday and became oversold. China Southern Airlines (NYSE:ZNH) is also ready to bounce back up, just like smaller rival China Eastern Airlines (NYSE:CEA). Smaller UTStarcom (NASDAQ:UTSI) is also ready to bottom out, according to the oversold chart. Sina Corp. (NASDAQ:SINA) is gone from the overbought chart after a 15% drop yesterday.

Most of the action is takng place on the oversold end of the China stock universe on Wednesday. Chinese webportals fell hard after Sina Corp. (NASDAQ:SINA) announced it will oblige by Chinese internet censorship to its Twitter like service, Weibo.com. The bad news sent the rest of the sector falling. Sohu.com Inc. (NASDAQ:SOHU) shed another 5% and became oversold. NetEase.com Inc. (NASDAQ:NTES), another internet heavy weight, followed the market lower as well. But while SOHU is oversold and ready to bounce back up, the bottom is not necessarily as close for NetEase.com Inc. (NASDAQ:NTES).

Chinese airliners fell hard over the last two week and some of the became oversold. Upside potential exceed downside risk for China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH).

UT Starcom (NASDAQ:UTSI) looks similar to Sohu.com Inc. (NASDAQ:SOHU) on the oversold screen albeit lower volume renders technical indicators less accurate.

OS_2011921

There are no overbought China stocks at the moment. One of the most important changes from yesterday is that Sina Corp. (NASDAQ:SINA) is gone from the list. The stock lost most of its momentum with no indication where it's going to go from here. More downside is certainly possible.

OB_2011921

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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