December 9, 2011 (Chinavestor) LDK Solar (NYSE:LDK) made another run on Thursday, sending the stock to overbought extremes. That said the stock is ready for a pullback. Suntech Power (NYSE:STP) and Yingli Green Energy (NYSE:YGE) are less vulnerable from a technical point of view. Trina Solar (NYSE:TSL) is way back on the overbought monitor.
But investors have to remember that stocks can't really fight the market. That said, should LDK Solar (N YSE:LDK) fall back, the rest is expected to follow, albeit to a lesser degree. Trina Solar (NYSE:TSL) has the least downside but Yingli Green Energy (NYSE:YGE) and Suntech Power (NYSE:STP) are more susceptible to downside risk. Again, LDK Solar (NYSE:LDK) is overbought and is expected to take a breather.
Just a quick reminder: we said yesterday that solar stocks can go higher after the pullback earlier the week - and this is what LDK Solar (NYSE:LDK) did.
With no stock extremes on the oversold end of the China stock universe, today's report doesn't have trading stocks to follow.
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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