May 30, 2012 (Chinavestor) NetEase.com Inc. (NASDAQ:NTES) is the big development on the overbought chart below. The stock advanced 5.99% on Tuesday but more upside is possible according to the overbought chart. Huaneng Power Int. (NYSE:HNP) is not overbought either. The stock is still far from theoretical highs.
Silvercorp Metals (NYSE:SVM), on the bottom of the following chart, made a significant comeback from extreme oversold position but is still just at the low end of its trading envelope. Upside is certainly not limited for the stock at current prices.
Earnings continue to hurt E Commerce China (NYSE:DANG) with no sign of relief. Solar stocks are hurting as well, as the oversold chart testifies. Yingli Green Energy (NYSE:YGE) just reported before the opening bell today, swinging to a loss of $45 million with cash reserves of $674 million. Yet outlook for the industry remains dim.
China Mobile (NYSE:CHL) bumped up on Tuesday but is still trading below its trading envelope. More upside is likely over the course of the week.
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.