November 4, 2013 (Chinavestor) Chinese stocks continue to suffer on US exchanges. While the S&P is at record highs and US stocks have momentum, Chinese stocks lack investor interest according to the overbought China monitor below. Sinopec (NYSE:SNP), the stock trading closest to theoretical highs, is just above its trading range and is really a stock with no momentum. Far from an overbought position.
The oversold China ADR list is a lot more active and some stocks are of interest to investors. Liquid stocks like NetEase (NASDAQ:NTES), Changyou.com (NASDAQ:CYOU), Sohu.com (NASDAQ:SOHU) and Renren Inc. (NYSE:RENN) are hurting albeit have not reached theoretical lows yet. This suggests more downside is possible but any additional downside may put the stock in an extreme oversold position. That is an opportunity to buy into weakness. Keep your eyes on these stocks!
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.