May 4, 2012 (Chinavestor) Overbought New Oriental Edu (NYSE:EDU) pulled back on Thursday, making it to look a lot better by Friday. The stock is ready for more upside but that hinges on market sentiment. Latest jobs report suggest the US economy added less jobs than originally thought, raising questions about the pace of improvement.
China Mobile (NYSE:CHL) stepped out of its trading range and while is not overbought, downside risk is on the rise.
Energy stocks stopped their advance as well. Petrochina Co. Ltd. (NYSE:PTR) and CNOOC Ltd. (NYSE:CEO) both fell on Thursday and are likely to continue to bleed in the wake of negative market sentiment and falling oil prices.
When markets head south, the list of oversold China stocks is on the rise. Changyou.com (NASDAQ:CYOU) is very close to theoretical lows but when earnings are behind such steep decline, more downside is possible. The same goes for Vimicro International (NASDAQ:VIMC) and Phoneix New Media (NASDAQ:FENG) and China Green Agriculture (NYSE:CGA). Despite recent losses, more of the same is coming, according to the oversold report.
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.