March 23, 2012 (Chinavestor) China Housing & Land Development (NASDAQ:CHLN) and Origin Agritech (NASDAQ:SEED) crumbled on Thursday, just as the overbought monitor suggested a day earlier. But China Automotive Systems (NASDAQ:CAAS) advanced even more, making the stock overbought to the extremes by Friday.
Mindray Medical (NYSE:MR) and NetEase,com Inc. (NASDAQ:NTES) are trading above their trading ranges but are off theoretical highs. This suggests upside is not limited by technicals at this point.
The same is true for Baidu.com Inc. (NASDAQ:BIDU), China's largest internet company by market value.
China Eastern Airlines (NYSE:CEA) is trading closest to theoretical lows and is about to reach an extreme oversold position. It may not be Friday that the stock will bounce back up but chances are that the stock will sooner than later. High oil prices hurt airliners world wide but when large cap stocks approach theoretical lows, time is here to buy into weakness.
China Lodging Group (NASDAQ:HTHT) is almost as oversold as China Eastern Airlines (NYSE:CE), but the stock fell following a disappointing quarterly earnings and as such is not expected to recover anytime soon.
China Unicom (NYSE:CHU) and Silvercorp Metals (NYSE:SVM) are also hurting but their recovery is dependent on overall market momentum at this point.
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.