October 14, 2011 (Chinavestor) Chindex Int. (NASDAQ:CHDX) became overbought and is ready to slow down. But upside is not limited by technicals for Harbin Electric (NASDAQ:HRBN), Zhongpin Inc. (NASDAQ:HOGS) or China Life Insurance (NYSE:LFC). Momentum dried up for Spreadtrum Communications (NASDAQ:SPRD) and E-House Holdings (NYSE:EJ) as both stocks pulled back on Thursday. Nevertheless both have upside potential left. Qihoo 360 Technology (NYSE:QIHU) advanced 15% this week already but has more upside left. Sina Corp. (NASDAQ:SINA) surged over 18% yesterday and is not overbought either! Baidu.com Inc. (NASDAQ:BIDU), the largest Chinese search engine company, is not overbought leaving room to the upside. China Sky One Medical (NASDAQ:CSKI) and China Sunergy (NASDAQ:CSUN) look ugly on the oversold screen though both companies are of low trading quality: no volume and low market cap.
Chinese internet stocks are looking good ahead the opening bell for Google Inc. (NASDAQ:GOOG) reported sound earnings after the close on Thursday. This bodes well for Qihoo 360 Technology (NYSE:QIHO), the only internet stock on the overbought screen this morning. But Baidu.com Inc. (NASDAQ:BIDU) is expected to get a second wind after a lackluster performance Thursday. Sina Corp. (NASDAQ:SINA) is not overbought and will get a lift as well.
Chindex International (NASDAQ:CHDX) is expected to take a break on Friday for the stock reached theoretical highs.
Harbin Electric (NASDAQA:HRBN) is not bound by technicals yet.
China Life Insurance (NYSE:LFC) has more upside as well albeit the stock succumbed to prift taking in Hong Kong earlier today.
E-House Holding (NYSE:EJ) is showing momentum but the stock fell short of expectations on Thursday. A strong market day can carry it higher. The same is true for Spreadtrum Communications (NASDAQ:SPRD), another sound trading stock.
There are no oversold China stocks at the moment. China Sky One Medical (NASDAQ:CSKI) and China Sunergy (NASDAQ:CSUN) are looking bad although none of them reached theoretical lows yet. Additionally, investors have to consider that both stocks have low volume rendering technical indicators inaccurate.
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.