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AXP hangs on by Friday

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advance2 June 7, 2013 (Chinavestor) There are no overbought Dow components Friday morning according to the following chart. The Dow Jones Industrial Average (INDEXDJX:.DJI) made a strong comeback on Thursday afternoon but that's still no match for the losses the index suffered in the last few weeks.

American Express (NYSE:AXP) is trading closest to theoretical highs but that's only because the rest of the Dow components fell even harder. Only seven out of 30 components are up compared to prices two weeks ago. See chart for details.

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There is a lot more action taking place on the oversold end of the Dow index. The Travelers Co. (NYSE:TRV) is considered oversold and so is McDonald's Corp. (NYSE:MCD). Both are ready to shine should market sentiment turn.

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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.

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