April 26, 2012 (Chinavestor) There are no overbought Chinese stocks today. Baidu.com Inc. (NASDAQ:BIDU) earnings failed to impress most investors, hurting tech stocks all over the place. Qihoo 360 Technology (NYSE:QIHU) is off the overbought chart completely but NetEase Inc. (NASDAQ:NTES) managed to advance. Baidu's numbers were not as bad as extended hours traders thought, the stock made a comeback after a lousy open. This helped social media company RenRen Inc. (NYSE:RENN) to end the day in the black despite a weak opening.
Melco Crown Entertainment (NASDAQ:MEPL), a great trading stock, is on top of the overbought chart but make no mistake investor, the stock is far from extreme overbought position. More upside is possible albeit it needs an accommodating market sentiment.
Chinese small caps have enjoyed some advances as the follwoing chart deisplays, but their trading charateristics makes technical indicators less accurate. that said be caseful with Feihe International (NYSE:ADY) or China Nepstar (NYSE:NPD).
Changyou.com Ltd. (NASDAQ:CYOU) has leveled off since Monday but remains close to theoretical lows. This suggests the stock has a lot more upside potential should the company surprise investors to the upside with a Q1 report.
Investors continue to dislike Sina Corp. (NASDAQ:SINA) according to the oversold chart. The bad news for Sina longs is that the stock is far from theoretical lows, leaving a lot more room to the downside.
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.