April 30, 2012 (Chinavestor) Good news China stock investors. There are no overbought China plays this morning. Melco Crown Entertainment (NASDAQ:MPEL) is ready for more upside along with HSBC Plc. (NYSE:HBC), a Hang Seng Index heavy weight. Sohu.com (NASDAQ:SOHU) fell 6% pre-market after missing on Q2 guidance and is expected to pull back to its trading envelope. E-House Holdings (NYSE:EJ) is ready for more upside as well, according to the overbought monitor.
Phoenix Media (NASDAQ:FENG) and WSP Holdings (NYSE:WH) are trading closest to theoretical lows. But none are considered oversold, suggesting more downside is possible. Baidu.com Inc. (NASDAQ:BIDU) is feeling a pain but may make a comeback along the market. The stock is not oversold despite losses from last week.
Finally, Changyou.com Ltd. (NASDAQ:CYOU) has bottomed out and is off the oversold screen. But expect some action from the company as earnings news sink in.
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.