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SINA, JOBS, HSBC and BIDU are oversold the most

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compare January 30, 2014 (Chinavestor) There are a good number of Chinese stocks that are ripe for a comeback. Upside potential exceeds downside risk for these extremely oversold Chinese stocks. They are 51job Inc. (NASDAQ:JOBS), Sina Corp. (NASDAQ:SINA), HSBC Plc. (NYSE:HSBC) and Baidu Inc. (NASDAQ:BIDU).

It's not that these stocks fell all in a sudden on Wednesday but have been falling for quite some time by now. Yesterday's closing bell analysis revealed that Baidu Inc. (NASDAQ:BIDU) and Sina Corp. (NASDAQ:SINA) fell the most among Chinese stocks by far. See related article: BIDU, SINA leads China stocks lower.

But again, it was not just a single day's decline that sent BIDU's shares from $175 to $158 but a two week process. Sina Corp. (NASDAQ:SINA) is very similar, a highly volatile two weeks session ended the stock lending in the oversold extreme zone.

The size of the arrow for HSBC Plc. (NYSE:HSBC), Sina Corp. (NASDAQ:SINA) and 51job Inc. (NASDAQ:JOBS) suggests these stocks fell too much, too hard and are ready for a technical correction.

ADR_OS_20140130

There are no overbought Chinese stocks this time. GigMedia Limited (NASDAQ:GIGM) is a low trading quality stock and thus please ignore the overbought indicator for this one. Shanda Games (NASDAQ:GAME) is a lot more liquid stock and thus is worth paying attention to. Yet GAME is far from theoretical highs and is not considered overbought this time. The indicator simply means that GAME hasn't collapsed as most Chinese stocks did in the last two weeks.

ADR_OB_20140130

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.

 

aa_OBOS_expl_2weeks



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