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China technology stocks are oversold

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buy_sell_hold_icon October 3, 2011 (Chinavestor) Technology stocks took the lead on the oversold indicator. Baidu.com Inc. (NASDAQ:BIDU) is obviously oversold. The only reason Sina Corp. (NASDAQ:SINA) and Home Inns & Hotels Management (NASDAQ:HMIN) are not on the oversold chart is this: the program stopped running because these two stocks are WAAAAYYYY oversold. Bottom may be closer for Changyou.com Inc. (NASDAQ:CYOU) and Melco Crown Entertainment (NASDAQ:MPEL) than for Shanda Interactive (NASDAQ:SNDA) or Focus Media Holdings (NASDAQ:FMCN). NetEase.com Inc. (NASDAQ:NTES) and Sohu.com (NASDAQ:SOHU) are not as oversold as the rest of the big names. More downside is possible for China Eastern Airlines (NASDAQ:CEA) as well.As far as overbought China stocks are concerned: there is not much to asses today.

Sina Corp. (NASDAQ:SINA) went from a $110 stock to a $70 in just two weeks. The stock is certainly oversold and is ready to make a comeback. Home Inns & Hotels Management (NASDAQ:HMIN) is in similar shoes and is ready to for a technical correction to the upside. Baidu.com Inc. (NASDAQ:BIDU) is just as oversold and has little room left to the downside, according to the oversold chart.

Interestingly, Sohu.com Inc. (NASDAQ:SOHU) has downside left for the stock hasn't reached theoretical lows yet. NetEase.com Inc. (NASDAQ:NTES), another internet heavy weight, is just like NTES.

Shanda Interactive (NASDAQ:SNDA) fell hard but has room to the downside along with Focus Media Holdings (NASDAQ:FMCN).

The decline of China Eastern Airlines (NYSE:CEA) is severe but problems persist, at least from a technical point of view. No bottom fishing yet!

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There are no overbought China stocks to speak of today. Stocks with some noticeable momentum include Acorn Int (NYSE:ATV) and Actions Semi (NASDAQ:ACTS).

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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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