December 9, 2013 (Chinavestor) Despite a strong day on Friday, US listed Chinese stocks lost most of their momentum according to the overbought monitor below. Actions Semi (NASDAQ:ACTS) is trading closest to theoretical highs but this is a low volume stock that renders technical indicators less accurate. Asiainfo (NASDAQ:ASIA) has some momentum left along with Melco Crown Ent. (NASDAQ:MPEL).
Larger Baidu.com (NASDAQ:BIDU) made it only to the bottom of the overbought screen. Good news is that the stock is not overbought at the moment.
Chinese solar stocks feel the heat after last week's meltdown. Trina Solar (NYSE:TSL) is trading at theoretical lows and Rene Sola (NYSE:SOL) and Yingli Green Energy (NYSE:YGE) isn't doing much better either.
HSBC Holdings (NYSE:HSBC) fell below its trading range in rapid succession but is not considered oversold. This Hang Seng Index heavy weight is worth paying attention to.
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.