March 5, 2014 (Chinavestor) Chinese real estate portal SouFun Holdings (NYSE:SFUN) surged as much as $8.5 or 10% after two hours of trading on Wednesday. While current stock price is still not 52 week high, the unusual advance in the past few days sent its shares way overbought. It is different from Tesla Motors (NASDAQ:TSLA), a similarly volatile stock. Tesla is not overbought and we are going to show visual clues why.
For the record: SouFun Holdings (NYSE:SFUN) jumped the most among major Chinese listings on Tuesday, March 4. As a matter of fact SFUN surged more than twice as much as second best Baidu Inc. (NASDAQ:BIDU). The good news was that despite a $4.8 advance, SFUN was not overbought before the market open this morning.
But that has changed. SouFun Holdings (NYSE:SFUN) surged over 10% by 11:00 A.M. and is now trading way above its trading range. See chart below for details.
And to see how much SFUN is trading at extremes, let's take a look at Tesla Motors (NASDAQ:TSLA). This electric car maker is one of the hottest stock on the NASDAQ lately and is trading next to all time highs. Yet, current stock price above $250 is not so extreme.
Based on this trading range analysis, shares of SouFun Holdings (NASDAQ:SFUN) are overbought. This implies the stock advanced too much, too fast and is ready for a technical correction. Remember, overbought is not the same as bearish. It only implies that the stock is expected to take a breather very soon.