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CTRP and other China stocks extremes

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watch_4 November 18, 2011 (Chinavestor) China stocks retreated from extreme overbought position on Thursday giving way to oversold stocks. Fushi Copperweld (NASDAQ:FSIN) and ChinaCast Education (NASDAQ:CAST) took a breather and are ready to climb higher. Ctrip.com International (NASDAQ:CTRP) remains oversold with Ku6 Media (NASDAQ:KUTV) in its footsteps. But don't bet on a rebound from China Infrastructure Development (NASDAQ:CIIC), a stock that is going to get delisted.

Fushi Copperweld (NASDAQ:FSIN) fell 0.51% yesterday after reaching an extreme overbought position earlier the week. The stock is ready for more upside should market sentiment improve.

The same is true for ChinaCast Education (NASDAQ:CAST), a stock that gave back 5.28% on Thursday but is still up over 30% for the week. The technical correction on Thursday was well taken giving more upside potential for the stock for Friday, according to the overbought screen.

Zhongpin Int. (NASDAQ:HOGS) is a stocks with upside potential albeit upside is not granted.

OB_20111118

Looking at the oversold screen, Ctrip.com International (NASDAQ:CTRP) is clearly oversold. The stock fell hard following quarterly results but has little downside risk with significant potential upside.

Ku6 Media (NASDAQ:KUTV) is not oversold to the extremes and as such may continue to deteriorate. Nevertheless upside potential exceeds downside risk for the stock.

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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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