July 17, 2012 (Chinavestor) Chinese airliners caught fire after Chinese regulators announced plans to ease taxes and spur investment into the sector. When fundamentals are behind such surge, technical indicators are meaningless to some extent. More upside is possible for both ZNH and CEA based on fundamentals.
Selected consumer stocks continue to recover, like China Green Agriculture (NYSE:CGA), Synutra International (NASDAQ:SYUT) and China Kanghui Hold. (NYSE:KH).
But as much as the overbought chart may be interesting, investors should scroll down to the oversold chart to find good trading opportunities for Tuesday.
Sohu.com Inc. (NASDAQ:SOHU) fell well below the $40 level and is trading at over 4 year lows. The stock is considered oversold, offering trading opportunity for the risky investor.
Steep decline of Seaspan Corp. (NYSE:SSW) and Simcere Pharma (NYSE:SCR) are also stocks of interest. These stocks are considered oversold as well.
But Tudou Hold.ing (NASDAQ:TUDO) may have not bottomed out yet according to the oversold chart below.
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.