May 31, 2012 (Chinavestor) NetEase.com Inc. (NASDAQ:NTES) managed to eke out some gains on Wednesday, making it to the top of the overbought chart. But despite recent advances the stock is not considered overbought. Current stock price is still far from theoretical highs, leaving more room to the upside.
Silvercorp Metals (NYSE:SVM) has the best comeback story, the stock is now trading within its trading range.
Small cap KongZhong (NASDAQ:KONG) and Yucheng Technologies (NASDAQ:YTEC) are trading the highest above their trading ranges, making them vulnerable to a pullback. Yet investors have to remember that technical indicators, the overbought oversold indicator included, work best for large cap, liquid names.
E Commerce China (NASDAQ:DANG) is now oversold and may bottom out or bounce back, according to the oversold monitor below. China Mobile (NYSE:CHL) and China Unicom (NYSE:CHU) are also stocks with more upside potential than downside risk at this point.
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.