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JOBS, QIHO, ADY in danger

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warning3 February 27, 2012 (Chinavestor) There are three overbought stocks investors have to be aware of: 51job Inc. (NASDAQ:JOBS), Qihoo 360 Technology (NYSE:QIHU) and American Dairy (NYSE:ADY). Yingli Green Energy (NYSE:YGE) is the most liquid stock of interest on the oversold indicator.

Besides a technical reading, investors have to remember that 51job Inc. (NASDAQ:JOBS) rose over 10% last Friday based on fundamentals. The company beat estimates and issued a bullish outlook as well. The stock is trading far from 52 week highs and such a strong fundamental report is a holy grail.

Qihoo 360 Technology (NASDAQ:QIHU) rose 15% in the last three trading days and is overbought. The stock is vulnerable to a correction, according to the following chart.

OB_20120227

There are no extremely oversold China stocks at the moment. Yingli Green Energy (NYSE:YGE) fell hard but is far from theoretical lows. Trina Solar (NYSE:TSL), another prominent Chinese PV manufacturer, is also on the low end of its trading envelope. More downside is possible though.

OS_20120227

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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