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DANG still on fire

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advance_12 April 5, 2012 (Chinavestor) Investors have to be aware of a couple of overbought stock before the long Easter Holiday weekend. China Housing & Land Development (NASDAQ:CHLN) is one but downside risk exceeds upside potential for Linktone Ltd. (NASDAQ:LTON) as well. E Commerce China Dangdang Inc. (NYSE:DANG) looks similar on the overbought screen to LTON but there are some notable differences between the two. DANG enjoyed large volume in the past three trading days and is a lot more liquid stock in general than LTON or CHLN. This suggests upside is a lot more likely for E Commerce China Dangdang Inc. (NYSE:DANG).

Notable movers on the oversold screen include Sina Corp. (NASDAQ:SINA), Origin Agritech (NASDAQ:SEED) and ReneSola Ltd. (NYSE:SOL). Please scroll down for details.

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ReneSola Ltd. (NYSE:SOL) is is considered oversold along with Origin Agritech (NASDAQ:SEED). Both stocks may reach bottom but how fast they would recover is still a question. Despite recent losses, more downside looks possible for China Gerui Adv. Material (NASDAQ:CHOP) as well as for JA Solar Holdings (NASDAQ:JASO).

Sina Corp. (NASDAQ:SINA) fell from $80 to $62 since March 9 and is felling the pain. Downside risk still persists albeit is not elevated. The stock is trading below its trading range and may start a recovery from there.

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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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