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No stock extremes late Dec

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risk_2 December 28, 2011 (Chinavestor) China stocks continue to trade in a narrow range as the year is coming to an end. Stocks of interest include those that are trading above their 50-DMA and 200-DMA simultaneously. Seaspan Corp. (NYSE:SSW) is one of them followed by ChinaCast Education (NASDAQ:CAST) and China XD Plastics (NASDAQ:CXDC) on the overbought screen. Sinopec (NYSE:SNP) and Huaneng Power International (NYSE:HNP) are also stocks with sound momentum and far from extreme overbought position. When it comes to oversold stocks, there is not much change on the second screen from yesterday.

Taking a closer look at the overbought stock list, the good news is that there are no stock extremes to worry about. Given low market volume between the Holidays, that may continue to be the case. Nevertheless Seaspan Corp. (NYSE:SSW) is one of them followed by ChinaCast Education (NASDAQ:CAST) and China XD Plastics (NASDAQ:CXDC) are well positioned for additional upside should market sentiment improve. Upside may be limited for large cap Sinopec (NYSE:SNP) and Huaneng Power International (NYSE:HNP) yet both are compelling plays in times of uncertainty.

 

OB_20111228

Small cap Qiao Xing Mobile (NYSE:QXM) may seem to be oversold but the stocvk is a small cap, low trading volume play that can goof up technical indicators easily. More downside looks possible for China Housing & Land Development (NASDAQ:CHLN) as well as for China Natural Resources (NASDAQ:CHNR).

OS_20111228

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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