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After pullback, more upside ...

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advance7 December 22, 2011 (Chinavestor) There are no overbought stock extremes today. LDK Solar (NYSE:LDK), Seaspan Corp. (NYSE:SSW) and China XD Plastics (NASDAQ:CXDC) pulled back on Wednesday. More aggressive moves are portrayed on the oversold chart though. China Mobile (NYSE:CHL) is still a bargain, according to the oversold monitor along with Baidu.com Inc. (NASDAQ:BIDU).

Given that there are no overbought Chinese stocks at the moment, upside potential is good for momentum stocks with sound momentum. These include, but is not limited to, Seaspan Corp. (NYSE:SSW), Sinopec (NYSE:SNP), Mindray Medical (NYSE:MR) and China XD Plastics (NASDAQ:CXDC) on the following screen. Chinese solar stocks are hard to predict given Europe's uncertain economic outlook. Europe is the largest export market for Chinese PV makers. 

OB_20111222

Despite some volatile moves, investors should pay attention to stocks with substance. This gives way to China Mobile (NYSE:CHL), China's largest mobile carrier. The stock is tradinhg below its trading range and is a good buy given fundamentals.

China's leading search engine company, Baidu.com Inc. (NASDAQ:BIDU), gave back all of Tuesday's gain on Wednesday. The stock is not oversold but has a lot upside potential left, according to the chart below.

OS_20111222

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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