November 26, 2013 (Chinavestor) Most overbought Chinese stocks pulled back on Monday. Still some Chinese ADRs advanced too fast, too much according to the overbought monitor below. Take a look at Giant Interactive (NYSE:GA) for example. The stock is trading way above its trading envelope. Spreadtrum Communications (NASDAQ:SPRD) is also in the danger zone.
Xueda Education Group (NYSE:XUE) is trading closest to theoretical highs and is considered overbought as well.
There are some oversold Chinese stocks as well. Huaneng Power Int. (NYSE:HNP) is one of them and so is Ctrip.com (NASDAQ:CTRP) and Sina Corp. (NYSE:SINA). These stocks have reached theoretical lows and might bounce back sooner than later.
Zenix Auto (NYSE:ZX) and Acorn Intl. (NYSE:ATV) fell too much, too fast 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.