That said, investors have to exercise caution and possibly take profits off the table from the following stocks. Youku.com Inc. (NYSE:YOKU) is clearly overbought at this point. The stock reached theoretical highs and is trading way above its trading range.

CNOOC Ltd. (NYSE:CEO) is almost identical to YOKU from a technical point of view. One thing is certain: downside risk exceeds upside potential for China's offshore oil specialist.

Qihoo 360 Technology (NYSE:QIHU) is also in vulnerable position, the best course investors can take is to lock in profits.

China Unicom (NYSE:CHU) bounced back, just as expected, and is off extreme oversold position. But the stock is still on top of the oversold chart for it is trading closest to theoretical lows.

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.