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Technology stocks no more extremely oversold

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advance9 October 5, 2011 (Chinavestor) Chinese technology stocks soared in the last hours of trading on Tuesday. Yingli Green Energy (NYSE:YGE) soared 14.29%. Most of the advance moved stocks away from extreme oversold position but was not enough to send them to overbought territory. Chinese Internet stocks lost all earlier gains by late afternoon, before the late rally. Sina Corp. (NASDAQ:SINA) ended the day 7.03% higher while Baidu.com Inc. (NASDAQ:BIDU) rose 4.69%. Oversold Home Inns & Hotels Management (NASDAQ:HMIN) surged 10.00% and is off the oversold chart. To see a sea change from yesterday, take a look at yesterday's oversold chart: Technology yes, airliners not oversold. Sina Corp. (NASDAQ:SINA) was the most oversold China stock on Tuesday but that's now history. The stock is still trading below its trading range, suggesting there is a lot of ground left to make up.

The largest Chinese internet stock, Baidu.com (NASDAQ:BIDU) surged in the last hour as well. The stock continued to climb steadily in after the market close, indicating that bulls are back.

Extreme oversold Home Inns & hotels Management (NASDAQ:HMIN) was ready to soar, and it did just that. With a 10% advance on its belt, the stock is completely off the oversold chart.

NetEase.com Inc. (NASDAQ:NTES), another oversold chart from a day before, advanced 4.79%, outperforming the broad market. More upside is possible for these quality Internet stocks.

Chinese solar stocks were not oversold to the extremes but were hurting for a long time. That changed when Yingli Green Energy (NYSE:YGE) surged in the last trading hour of the day yesterday. Suntech Power (NYSE:STP) and Jinko Solar (NYSE:JKS) exploded, surging over 20%!

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There isn't much change to be seen on the overbought monitor from yesterday despite some notable advances. Technical indicators need a little more legroom to display meaningful results.

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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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