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Time for profit taking? HNP, SNP ...

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question_2 November 14, 2011 (Chinavestor) Large cap China stocks took the lead on the overbought monitor this morning. Huaneng Power International (NYSE:HNP) and Sinopec (NYSE:SNP) are trading closest to theoretical highs albeit more upside looks possible. Linktone Ltd. (NASDAQ:LTON) advanced too much, too fast and is ready for a pull back, according to the monitor below. Small cap Cogo Group (NASDAQ:COGO), China Sky One Medical (NASDAQ:CSKI), and China Automotive Systems (NASDAQ:CAAS) fell hard last week but are not oversold yet. Sina Corp. (NASDAQ:SINA) has been trading in a narrow range lately, as the oversold monitor suggests.

Back to the overbought screen. More upside is possible for Huaneng Power International (NYSE:HNP) but the stock is trading close to theoretical highs. Similarly, Sinopec (NYSE:SNP) has approached theoretical highs but is not trading at extremes yet. This implies there is a possibility for additional short term upside but downside risk is on the rise.

Linktone Ltd. (NASDAQ:LTON) is trading at extremes for its advance was too fast, too much. China Nepstar (NYSE:NPD) is a low volume stock that is hard to read using technical indicators.

OB_20111114

China stocks to watch on the oversold monitor include Cogo Group (NASDAQ:COGO), China Sky One Medical (NASDAQ:CSKI), and China Automotive Systems (NASDAQ:CAAS). While these stocks fell hard last week, they haven't reached theoretical lows yet. This implies more downside is possible.

Sina Corp. (NASDAQ:SINA) is one of the largest internet stocks from China. The stock is not oversold but is trading close enough to theoretical lows to get on the oversold screen. There is a lot of upside potential for the stock according to the monitor below.

OS_20111114

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.

aa_OBOS_expl_2weeks



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