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Overbought China stocks after Pres. day

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pres_day February 21, 2012 (Chinavestor) New Oriental Education (NYSE:EDU) has reached theoretical highs and is ready for a technical correction, according to the overbought chart below. Home Inns & Hotels Management (NASDAQ:HMIN), China Edu Corp. (NASDAQ:CEDU) are also in the danger zone. But short term outlook is not as worrisome for CNOOC Ltd. (NYSE:CEO) and Guangshen Railway (NYSE:GSH). There isn't much to see on the oversold screen this morning, except for Global Sources (NASDAQ:GSOL) and China Sky One Medical (NASDAQ:CSKI).

 

Looking at the 25 most overbought Chinese stocks today, the only stock that's really out of the norm is New Oriental Education (NYSE:EDU). The stock price has reached theoretical highs. This implies Tuesday may be a perfect day to take profits.

Home Inns & Hotels Management (NASDAQ:HMIN) has been on fire lately and is trading above its training envelope. But the pace of advance is normal, suggesting more upside is possible.

China's offshore oil driller, CNOOC Ltd. (NYSE:CEO) is looking good from a technical point of view. The stock is trading above its trading range but hasn't reached theoretical highs yet.

OB_20120221

Global Sources (NASDAQ:GSOL) and China Sky One Medical (NASDAQ:CSKI) fell hard but haven't reached theoretical lows yet. Despite a stellar decline, more downside is possible.

OS_20120221

 

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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