(Aug. 24, 2009 -Chinavestor) Shares of WuXi Pharma (NYSE:WX) jumped $1.18 or 10.4$ on Friday essentially getting back to where it jumped two weeks ago following second quarter earnings. This is a positive development compared to other smaller cap Chinese ADRs, like China Automotive Systems (NASDAQ:CAAS), when an earnings announcement related big jump continued into a steady price erosion. Based on the following overbought indicator, WuXi Pharma (WX) is not overbought, suggesting more upside in the coming days.
China Automotive Systems (NASDAQ:CAAS) remains overbought while AsiaInfo Holdings (NASDAQ:ASIA) and Sohu.com Inc. (NASDAQ:SOHU) have sustainable strong momentum. Baidu.com (BIDU), the largest Chinese search engine company, looks attractive despite recent rally. The stock is still within its normal trading range, far from its theoretical high.
Most overbought China stock list
Looking at he most oversold China stock list, JA Solar (JASO) and China Digital TV Holding (NYSE:STV) are ripe for a comeback as both ADRs are technically oversold. Small cap China TechFaith Wireless (NASDAQ:CNTF) has been on a slide following weak 2009 Q2 earnings but there is more to the downside, according to the oversold indicator. Shanda Interactive (NASDAQ:SNDA), one of the largest Chinese online game developer and operator, is offering more upside potential according to the oversold stock list.
Most oversold China stock list
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.