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SINA, SOHU are oversold

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warning1 November 29, 2011 (Chinavestor) There isn't any extremely overbought China stock at the moment. China Transinfo (NASDAQ:CTFO) and AirMedia Group (NASDAQ:AMCN) are low volume stocks that make the indicator inaccurate. China XD Plastics (NASDAQ:CXDC) failed to advanced on Monday after a strong last week.

That said, most of the action is taking place on the oversold end of the China stock universe. Sina Corp. (NASDAQ:SINA) and Sohu.com Inc. (NASDAQ:SOHU) are looking interesting on the screen, along with Changyou.com Ltd. (NASDAQ:CYOU).

 

Back to the overbought screen. China Transinfo Tech. (NASDAQ:CTFO) may be trading closest to theoretical highs but again, this is a low volume small cap stock where technical indicators don't work accurately.

China XD Plastics (NASDAQ:CXDC) took a breather on Monday and can resume going higher on Tuesday.

Selected solar stocks, Yingli Green Energy (NYSE:YGE) and Trina Solar (NYSE:TSL) are also stocks with momentum on the overbought screen. More upside looks possible for both.

OB_20111129

Changyou.com Ltd. (NASDAQ:CYOU) is oversold and has more upside potential than downside risk. The stock was trading up 7% on Monday before surrendering most of the gains. Nevertheless more upside is possible.

Sina Cirp. (NASDAQ:SINA) fell hard and has more upside potential than downside risk as well.

Sohu.com Inc. (NASDAQ:SOHU) looks similar to Sina Corp. (NASDAQ:SINA) from a technical point of view. There is room left to the downside but upside potential looks greater at this point.

OS_20111129

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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