August 8, 2012 (Chinavestor) Low volume China Green Agriculture (NYSE:CGA) may be on top of the overbought chart, but what's really interesting is the position of China's two key airliners. China Eastern Airline (NYSE:CEA) and China Southern Airlines (NYSE:ZNH). Both airliners have approached theoretical highs though have not reached it. This may be a signal of additional upside. But investors have to keep in mind that large cap companies don't usually get to extreme overbought position. This in turn may implies that both airliners have reached their upside potential, at least temporarily.
Internet darling 51job inc. (NASDAQ:JOBS) and Sohu.com Inc. (NASDAQ:SOHU) fell out of grace lately. Both are trading well below their normal trading envelope and have approached theoretical lows. With earnings out, there is no reason to wait for an immediate large upswing. Rather both SOHU and JOBS may be stuck in the rut for now...
E-House Holdings (NYSE:EJ) is oversold though, something that may be beneficial for swing traders.
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.