June 18, 2012 (Chinavestor) The overbought monitor picked up a couple of big movers from last week. New Oriental Education (NYSE:EDU) stepped out of its trading envelope yet is far from theoretical highs. More upside is possible going forward. Chinese solar stocks gained momentum last week and more upside looks possible after a favorable vote in Greece over the weekend. We have Hanwha Solarone (NASDAQ:HSOL) and Canadian Solar (NASDAQ:CSIQ) showing some momentum on the overbought screen but more is to come as the week progresses.
There are three oversold stocks extremes to watch on Monday. eLong Inc. (NASDAQ:LONG) is considered oversold and may pop any time. Acorn Int. (NYSE:ATV) and UTStarcom (NASDAQ:UTSI) look similar on the o versodl screen and might make a comeback. China Natural Resources (NASDAQ:CHNR) and China Southern Airlines (NYSE:ZNH) are also stocks with a possible bounce.
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.