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BIDU, NTES not overbought

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momentum April 22, 2014 (Chinavestor) Selected Chinese technology stocks took advantage of the resurgent market on Monday. But it wasn't a cake walk for everyone. Large cap oil stock declined the most and considered safe telecom stock traded water.

Baidu Inc. (NASDAQ:BIDU), the largest Chinese telecommunications firm, advanced $4.31 or 2.77%, the most among major US listed Chinese stocks. NetEase Inc. (NASDAQ:NTES) followed suit. But all other major Chinese listings failed to advance more than a buck for the day.

When it came to decliners, oil producer Petrochina Co. Ltd. (NYSE:PTR) and CNOOC Ltd. (NYSE:CEO) took the lead. China Life Insurance (NYSE:LFC) fell $.59 or 1.43% followed closely by Sina Corp. (NASDAQ:SINA).

mover_20140421

The question is what difference one day advance or decline makes on the overbought and oversold chart.

Petrochina Co. Ltd. (NYSE:PTR), CNOOC Ltd. (NYSE:CEO), and NetEase Inc. (NASDAQ:NTES) are among the 25 most overbought Chinese stocks. Monday's decline put PTR in a narrow trading range with no indication where the stock is going to go from here. Most of the gains are gone for CNOOC Ltd. (NYSE:CEO) as well.

The advance of NetEase Inc. (NASDAQ:NTES) may not be that significant in points but is clearly showing on the following overbought screen. NetEase has momentum and is not considered overbought.

China Mobile (NYSE:CHL) and China Telecom (NYSE:CHA), both  stocks on the move on Monday, remain in a narrow trading range according to the overbought chart below.

ADR_OB_20140422

There are no oversold Chinese stocks at the moment as the following diagram testifies.

ADR_OS_20140422

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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