January 27, 2012 (Chinavestor) China Green Agriculture (NYSE:CGA) took the lead on the overbought screen since yesterday. But investors should be concerned with small solar maker Hanwha Solarone (NASDAQ:HSOL) as well as CNOOC Ltd. (NYSE:CEO), Cogo Group (NASDAQ:COGO) and China Gerui Adv. Material (NASDAQ:CHIOP) as well. Downside risk exceeds upside potential for Aluminum Corp. of China (NYSE:ACH) at this point but internet stocks, including Sohu.com Inc. (NASDAQ:SOHU) has more upside left.
Chinese telecoms continue to dominate the oversold screen. This gives a lot of upside potential for China Unicom (NYSE:CHU) as well as for China Telecom (NYSE:CHA) and China Mobile (NYSE:CHL). Watch out for the sector on Friday.
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.
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