September 14, 2011 (Chinavestor) There isn't much change from yesterday on the overbought monitor. Small cap, low volume stocks skew the monitor and remain overbought. Stocks of interest is Sina Corp. (NASDAQ:SINA) for its sound momentum lately. Most of the action took place on the oversold end of the China stock universe. Trading stock Melco Crown Entertainment (NASDAQ:MPEL) is trading close to theoretical lows, making it attractive. Silvercorp Metals (NYSE:SVM) fell apart following news that Muddy Waters is shorting the stock. Chances are that prominent solar stocks are going to bottom out, like Trina Solar (NYSE:TSL), Yingli Green Energy (NYSE:YGE) and JA Solar (NASDAQ:JASO). Giant Interactive (NYSE:GA) is hurting along with Changyou.com Inc. (NASDAQ:CYOU).
Taking a look at the overbought end of the China stock universe, the indicator is goofed up by a good number of small cap, low volume China stocks. Gushan Environmental Energy (NYSE:GU) may look like overbought albeit that may not be the case. Small stocks like this can receive a relatively small amount of money flows and remain on the top of the chart for some time.
What's important to see is the strength of Sina Corp. (NASDAQ:SINA). The stock shrugged off earlier weakness and went from $90/share to over $110 in less than a month. The good news is that despite the surge, the stock is not overbought! This bodes well for the rest of the sector, Sohu.com (NASDAQ:SOHU) and NetEasecom Inc. (NASDAQ:NTES) are expected to do well in addition.
Melco Crown Entertainment (NASDAQ:MPEL) the most oversold China stocks at the moment. As a trading stock, it requires overall positive market sentiment to make a comeback.
The bad news for Silvercorp Metals (NYSE:SVM) came after Muddy Waters stared shorting the stock. The stock fell 20% in huge volume and is unlikely to recover anytime soon. The stock is not oversold yet either. Death of Silvercorp Metals?
Trina Solar (NYSE:TSL) fell nine time out of the last eight trading days and may bottom out. We have written about that may happen next, and the most likely scenario is a slow, gradual recovery. Trina turns around. What's next?
But losses are not limited to Trina. Yingli Green Energy (NYSE:YGE) and JA Solar (NASDAQ:JASO) are alos suffering and are oversold to a similar degree. While they are not oversold to the extremes, chances are that they hit bottom or are very close right now.
Online gamers are hurting as well. Giant Interactive (NYSE:GA) and Changyou.com Inc. (NASDAQ:CYOU) are among the 25 most oversold China stocks.But there are no signs of a quick turnaround at this time, as far as the oversold monitor is concerned.
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.