November 21, 2011 (Chinavestor) Index futures foretold a triple digit fall of the Dow Jones Industrial Average (INDEXDJX:.DJI) today, making the usual overbought/oversold report a lot less useful. Normally we publish the most overbought and oversold Chinese stock list by 8:30 A.M. to give investors an idea what stocks are offering trading opportunities.
Some of the most dramatic changes on the following two charts. Vanceinfo Technologies (NYSE:VIT) is gone from the list after 30 minutes of trading. Fushi Copperweld (NASDAQ:FSIN) and Zhongpion Inc. (NASDAQ:HOGS) are holding on relatively well so far today. General Steel (NYSE:GSI) and Huaneng Power Int. (NYSE:HNP) are also stocks with significant losses.
Besides a few individual stocks, the following charts give investors an idea how much damage a 200 points plus decline
can do toChinese ADRs.
|Overbought list BEFORE open||Overbought list at 10:00 A.M.|
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.