July 16, 2012 (Chinavestor) Synutra Int. (NASDAQ:SYUT) surged 5.76% on Friday and 12.6% for the last week, making it susceptible to a break, according to the overbought monitor. China Southern Airlines (NYSE:ZNH) and China Eastern Airlines (NYSE:CEA) are also stocks on fire. Chinese airliners surged last Friday following news that they will enjoy relaxed taxation and investment from their state owned parents as Beijing is giving support for the industry. More upside is possible given the fundamental reason for the surge.
Zhongpin Inc. (NASDAQ:HOGS) is trading above its trading range as well but current stock price is far from theoretical highs. This bodes well for the stock for the short term.
Mindray Medical (NYSE:MR) and Fushi Copperweld (NASDAQ:FSIN) are stocks of interest on the overbought monitor as well. FSIN pulled back to healthy price range and is ready for more upside, if market sentiment gets behind it. Mindray Medical (NYSE:MR) came back from recent dip before earnings season kicks into high gear for Chinese stocks.
Despite recent decline, GigaMedia Ltd. (NASDAQ:GIGM), 3SBio (NASDAQ:SSRX) and China BAK Battery (NASDAQ:CBAK) are not oversold. More downside is possible.
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.