March 19, 2010 (Chinavestor) Shares of City Telecom (H.K.) Ltd. (NASDAQ:CTEL) advanced +18.9% by 11:15 A.M. on Friday reaching $14.61, an all time high. While this may come as a surprise to many, Chinavestor's overbought and oversold indicator predicted a rally, even if the magnitude was unexpected. We said earlier this week on March 16, 2010 Tuesday that "On the oversold end City Telecom (NASDAQ:CTEL) and WuXCi Pharmatech (NYSE:WX) became oversold and are ready to bounce back up." Overbought China stocks falter.
As the following chart testifies, City Telecom Ltd. (NASDAQ:CTEL) was the most oversold China stock listed in American exchanges. The sudden drop pushed the stock price down to theoretical lows, a sign that a technical bounce back is imminent.
Most oversold China stock chart on Tuesday, March 16, 2010
From oversold to overbought - see City Telecom (NASDAQ:CTEL) climbing up the China stock list.
Most overbought China stocks March 19, 2010 11:00 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.
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