April 4, 2014 (Chinavestor) The China stock monitor picked up oversold liquid, good trading stocks but none was found to be overbought.This gives traders a chance to buy into weakness and hope for a quick comeback.
First, the overbought China stock chart. UT Starcom (NASDAQ:UTIS) is on top followed by China Housing & Land Development (NASDAQ:CHLN). But investors have to remember that these stocks don't have sufficient trading volume and market capitalization to qualify for meaningful technical analysis. In other words, current overbought reading can be very misleading.
Instead, investors pay closer attention to developments with Huaneng Power (NYSE:HNP) and Petrochina Co. Ltd. (NYSE:PTR). These are the first two large cap, liquid NYSE listed Chinese stocks on the overbought monitor.
Extremely oversold Chinese stocks offer trading opportunities. 51job Inc. (NASDAQ:JOBS) is the most extreme China play today. The stock has reached OS position and is below the trading range.
Another stock with a chance to make a comeback is Sohu.com Inc. (NASDAQ:SOHU). While SOHU hasn't reached OS position yet, the decline is unusual and relatively large.
Sina Corp. (NASDAQ:SINA) is not extremely oversold despite recent weakness. As a matter of fact, current stock price of $59.32 is still far from theoretical lows of $55.70. Now that SINA is under the $60 mark, more weakness may come.
The oversold monitor picked up the unusual plunge of Qihoo 360 Technologies (NYSE:QIHU). QIHU plunged from over $120 to $93.40 in less than a month but is not considered oversold! More weakness may lay ahead...
Baidu Inc. (NASDAQ:BIDU) is off the oversold chart and is a good thing for the rest of the industry. When industry leaders fall, the rest follows. A stronger BIDU may be good news for oversold JOBS, SINA and SOHU!
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.