November 11, 2013 (Chinavestor) Chinese stocks continue to miss out on a strong American market. There are no overbought Chinese ADRs at the moment albeit a good number of them have started to gain some momentum. Small cap solar stocks lead the overbought China ADR monitor but investors have to pay attention to quality stocks like Seaspan Corp. (NASDAQ:SSW) or Sinopec (NYSE:SNP), among others.
The good news is that none of these stocks are considered overbought.
Most Chinese internet stocks fell hard last week, led by Sina Corp. (NASDAQ:SINA). Good news for the short run is that Sina (NASDAQ:SINA) became oversold and is expected to pop back up or at least take a breather. Short sellers and profit takers better pay attention to the stock today.
Sohu (NASDAQ:SOHU) and Ctrip.com Int. (NASDAQ:CTRP) are stocks with good trading characteristics and of interest on the oversold screen below. See chart for details.
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.