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BIDU, ACH, EDU has more upside

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advance5 February 14, 2012 (Chinavestor) There are no extremely overbought China stocks this morning. Even CNOOC LTd. (NYSE:CEO), the stock trading closest to theoretical highs, is not overbought to the extremes. Nevertheless downside risk exceeds upside potential for China's offshore oil specialist. Large industry leaders like New Oriental Education (NYSE:EDU) and Baidu.com Inc. (NASDAQ:BIDU) are looking good as well. Chinese solar stocks, like LDK Solar (NYSE:LDK) and Hanwha Solar One (NASDAQ:HSOL) are not overbought either. For stocks on the move on the oversold chart, like Sohu.com Inc. (NASDAQ:SOHU)please scroll down. Energy stocks might be in trouble with CNOOC Ltd. (NYSE:CEO) on the forefront. This stock has approached theoretical highs and while not overbought to the extremes, the stock is in the danger zone.

But outlook is better for Baidu.com Inc. (NASDAQ:BIDU) as the following chart testifies. China Oriental Education (NYSE:EDU), the largest and most liquid Chinese stocks from the education sphere, is looking good too.

Chinese solar stocks pulled back earlier this week after a sensational rally a week before. This gives more upside potential open for stocks like LDK Solar (NYSE:LDK).

OB_20120214

Chinese technology stocks fell hard, like Qihoo 360 Technology (NYSE:QIHU) or Sohu.com Inc. (NASDAQ:SOHU). The bad news is that more downside is possible at this point, none of them are considered oversold.

OS_20120214

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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