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Ctrip, FMCN and other stock extremes

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watch_out November 22, 2011 (Chinavestor) ChinaCast Education (NASDAQ:CAST) is trading closest to theoretical highs but is not overbought to the extremes. Most overbought stocks are gone after a heavy sell-off hit markets on Monday. Investors have to go to the oversold screen to find true China stock extremes this morning.  China Automotive Systems (NASDAQ:CAAS) is oversold and is followed closely by Changyou.com Ltd. (NASDAQ:CYOU) and Ku6 Media (NASDAQ:KUTV). Larger internet stock Ctrip.com International (NASDAQ:CTRP) bounced bakc up on Monday after hitting an extreme oversold position earlier the day. Focus Media Holdings (NASDAQ:FMCN) has more downside left, according to the oversold monitor. VisionChina Media (NASDAQ:VISN) and China Sky One Medical (NASDAQ:CSKI) are also stocks with steep losses.

Back to the overbought screen. First of all, there are no extremely overbought China stocks to speak of. ChinaCast Education (NASDAQ:CAST) is on top of the chart exhibiting some momentum. While more upside is possible from a technical point of view, it's subject to market sentiment. All other overbought stocks from last week are gone, like Huaneng Power Int. (NYSE:HNP) or China Life Insurance (NYSE:LFC).

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China Automotive Systems (NASDAQ:CAAS) is trading below its trading envelope and has approached theoretical lows. While this is an extreme oversold position, low volume of the stock renders the oversold indicator inaccurate.

Investors shunned online gamers, including Changyou.com Ltd. (NASDAQ:CYOU). The stock is offering value for the patient investor, albeit risk is always an issue with online gamers.

Ku6 Media (NASDAQ:KUTV) is another oversold stock that might turn around.

Upside potential continue to exceed downside risk for Ctrip.com International (NASDAQ:CTRP). We have argued several times that the stock is oversold to the extremes and is likely to make a comeback. The stock may have just bottomed out if the oversold indicator was right.

Desapite a close to 40% drop on Monday, Focus Media Holdings (NASDAQ:FMCN) is not oversold to the extremes yet. More downside is possible.

Low volume makes the oversold indicator hard to read for oversold VisionChina Media (NASDAQ:VISN) and China Sky One Medical (NASDAQ:CSKI).

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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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