(Aug. 26, 2009 - Chinavestor) The Chinese ADR universe looks neutral for the most part from a technical point of view on Wednesday morning. Not a single China stock is technically overbought, though some show strong momentum.
Looking at the most overbought Chinese ADR list below, Sohu.com Inc. (NASDAQ:SOHU) has the most momentum yet the stock is far from overbought. This in turn suggests there is more to the upside for this China Internet play. AsiaInfo Holdings (NASDAQ:ASIA), UTStarcom (NASDAQ:UTSI), Baidu.com (NASDAQ:BIDU) and WuXi Pharma (NYSE:WX) look good with strong momentum but far from the theoretical high. These stocks should do well if market sentiment remains positive.
Most overbought China stock list
Looking at the most oversold China stock universe, JA Solar (NASDAQ:JASO) and China Digital TV Holdings (NYSE:STV) remain to top the list. Both are hunted by weak 2009 Q2 reports suggesting a quick re-bounce is highly unlikely. Suntech Power (NYSE:STP), the prominent Chinese solar maker, has been losing momentum and hasn't established a bottom yet. But China Mobile (NYSE:CHL) seems to find support above the $50 level as the markets digest sluggish growth for 2009 first six month. China Mobile (NYSE:CHL) is not alone when it comes to sluggish growth; China Unicom (NYSE:CHU) reported slow growth for all three business segments a month earlier.
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.