June 26, 2012 (Chinavestor) It's worth paying attention to technical indicators today. Fushi Copperweld (NASDAQ:FSIN) surged $.76 or 11.3% yesterday in a spectacular run, but is considered overbought! Hanwha Solarone (NASDAQ:HSOL) had momentum but that might dry up after LDK Solar's (NYSE:LDK) weak 2012 Q1 numbers this morning. But Seaspan Corp. (NYSE:SSW) has sustainable momentum according to the overbought chart below. The stock has just stepped out of its trading envelope and is far from theoretical highs.
Dont' forget to scroll down to the oversold chart, we have some heavy hitters there like NetEase.com (NASDAQ:NTES) , Youku Inc. (NYSE:YOKU) and Baidu.com Inc. (NASDAQ:BIDU).
Chinese online video sites fell hard, according to the oversold chart. Tudou Hold. (NASDAQ:TUDO) may trade closer to theoretical lows but it is Youku.com Inc. (NYSE:YOKU) that fell harder. Neither TUDO not YOKU has reached theoretical lows yet, suggesting more downside is possible.
NetEase.com Inc. (NASDAQ:NTES) fell over 10% in just three days, sinking from the high end of its trading envelope to the low one.
One of the most dramatic decline belongs to ChinaCast Education, a formerly NASDAQ listing gone to the pinks. Visit back with us for a follow up article on this ticker.
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.