January 15, 2014 (Chinavestor) Good news China stock investors. There are no overbought Chinese ADRs at the moment. Canadian Solar (NASDAQ:CSIQ) is trading closest to theoretical highs and the pace of advance is a reason for concern. But all other stocks have upside potential left, according to the overbought China ADR Indicator below.
Scrolling down to the second chart revels that Ctrip.com (NASDAQ:CTRP) is not oversold anymore. This is bad news for those that were looking for more upside. But there are some good news concerning CTRP. The stock enjoyed a sizable uptick late in the trading and this was accompanied by huge volume. Strong money flows are always a good support for any stock.
China Unicom (NYSE:CHU) is another stock that has been on the oversold screen for too long. But the stock is not oversold at this point, giving no clear indication where CHU is going to go from here.
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.