February 6, 2014 (Chinavestor) Changyou.com Ltd. (NASDAQ:CYOU) is the most oversold China stock this morning. China's online game developer closed at $27.82, very close to theoretical lows of $27.6. On the upside, the stock is just below its trading envelope. Altogether we see downside risk exceeding upside potential for Changyou.com Ltd. (NASDAQ:CYOU) at this time.
China Automotive Systems (NASDAQ:CAAS) is next on the oversold screen. The stock has been trading in a narrow range lately. Good news is that the company got an analyst upgrade on February 3rd. Bad news that it failed to lift the stock significantly. It is difficult to read where CAAS is going to go from here based on all this.
China Life Insurance (NYSE:LFC) has been suffering as economic weakness in China hurts outlook for insurers. The stock is trading below its trading range but hasn't reached theoretical low point yet. More downside is possible but leveling off is the most likely scenario at this time.
We have Sina Corp. (NASDAQ:SINA), Baidu Inc. (NASDAQ:BIDU) and 51job Inc. (NASDAQ:JOBS) from the technology space on the oversold monitor. Despite weakness on Wednesday, as a matter of fact all three fell hard, they are not considered oversold. Rather, the indicator suggests more downside is still possible.
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.