April 8, 2010 (Chinavestor) Seven out of the eight U.S. listed Chinese stocks made it to the overbought screen Thursday morning. Gains for the sector look limited from here as LDK Solar (NYSE:LDK), ReneSola Ltd. (NYSE:SOL) and Solarfun Power (NASDAQ:SOLF) have approached theoretical highs. Suntech Power (NYSE:STP), Trina Solar (NYSE:TSL) look better from a technical point of view but again, advance of Canadian Solar (NASDAQ:CSIQ) and China Sunergy (NASDAQ:CSUN) look excessive compared to the rest of the sector.

Wonder Auto Technology, Inc (NASDAQ:WATG) was overbought yesterday but looks better today after taking a breather on Wednesday. China Information Security Tech, Inc (NASDAQ:CPBY), another overbought play from Wednesday fell -4.57% and is gone from the overbought list by today.

Back to solar stocks: high oil price helps alternative energy plays such as solar, wind and hydro power. Solar stocks look good based on fundamentals as well after hitting a bottom in the middle of 2009. Shipments have dramatically increased while margins have stabilized. JA Solar (NASDAQ:JASO) has just raised 2010 Q1 shipment guidance. Four solar stocks out of the total eight reported revenue and earnings growth for the last quarterer of 2009. For a comparative data, read Complete 2009 Q4 China solar stock guide.

The overbought monitor suggested share of Wonder Auto Technology, Inc (NASDAQ:WATG) became overbought yesterday and were ready to take a break. While the stock looks better from a technical point of view, the rally may stall as world markets hit a roadblock earlier today.

Most overbought China stocks

China GrenTech (NASDAQ:GRRF) fell -28% following worse-than-expected 2009 Q4 numbers. But with four more days on the losing streak, the stock is oversold suggesting a dead cat bounce is likely to come.

Rino International (NASDAQ:RINO) have fallen over -11% since last Wednesday but despite the significant losses, the stock isn't oversold yet. More downside is possible...

Xinhua Sports & Entertainment Ltd (NASDAQ:XSEL) was one of the worst performing China stocks yesterday and it's showing on the oversold monitor this morning.

Mindray Medical (NYSE:MR), a fundamentally solid Chinese medical equipment maker, fell -3.57% on Wednesday and has fallen -9.5% in the last two weeks. While the stock isn't technically oversold yet, the turnaround is likely to come sooner than later.

3SBio Inc. (NASDAQ:SSRX) fell -5.3% just on Wednesday but is trading within her trading range still, suggesting more downside is possible. .

Most oversold China stocks

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.