March 27, 2012 (Chinavestor) The overbought monitor picked up Baidu.com Inc. (NASDAQ:BIDU) as a stock to watch today. The stock is trading at theoretical highs and is ready to take a breather.
Mindray Medical (NYSE:MR) is also in the danger zone along with NetEase.com Inc. (NASDAQ:NTES) and Shanda Games (NASDAQ:GAME).
China eastyern Airlines (NYSE:CEA) moved away from theoretical lows, suggesting the recovery will be gradual and slow. China Lodging Group (NASDAQQ:HTHT) is oversold but is not ready to make an upswing yet.
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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