June 20, 2012 (Chinavestor) NetEase.com Inc. (NASDAQ:NTES) is trading way above its trading range after Tuesday's run and is likely to cool off, according to the overbought monitor. Huaneng Power International (NYSE:HNP) is another stock trading out of its trading band and is subject to some sort of a correction. But Chinese solar stocks are looking neutral despite strong showing earlier the week.
China Digital TV Hold. (NYSE:STV) took over the top spot from eLong Inc. (NASDAQ:LONG) on the oversold monitor. But noe of them have reached theoretical lows, suggesting more downside is possible.
There are no other oversold stock extremes on the monitor right now.
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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