March 8, 2010 (Chinavestor) Shares of E-House Holdings (NYSE:EJ) surged $1.91 or over +10% for the day thanks to a sizable surge in the afternoon. But the stock is becoming overbought and might take a break before resuming the rally. Shares of Melco Crown Entertainment (NASDAQ:MPEL) advanced +8.9% on Monday and is in the danger zone as well. China Telecom (NYSE:CHA) is the most overbought NYSE listed China stock and is telling investors: take profits now!

Top three most overbought China stocks on Monday after the close

We said this morning that "Melco Crown Entertainment (NASDAQ:MPEL) has been trading in a narrow range last week suggesting the stock is looking for a direction. Shares of MPEL are not overbought but is looking for a catalyst for additional upside." - an observation that proved to be right. Meclo has advanced +18% in the last five trading days and is up +38% for one month, raising downside risk. While more upside is possible chances that the stock will fall have increased substantially.

E-House Holdings (NYSE:EJ) has stretched itself too thin according to the overbought chart above. The sudden advance from $18 to over $21 in just three days suggest the stock is overbought. EJ 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.

China Telecom (NYSE:CHA) has ups and downs since the Deutsche Bank upgrade on March 1 but is considered overbought and might be up to a pullback. NYSE listed China ADRs rarely get overbought to a pint where CHA is right now. This is what we had to say about CHA this morning: "China Telecom (NYSE:CHA) is approaching theoretical highs yet more upside is possible. Hong Kong listed H-shares of the company (HKG:0728) advanced 1.99% on Monday, the most among China Mobile (HKG:0941) and China Unicom (HKG:0762). But don't expect a large cap NYSE listed China play to stay quasi overbought for a long time. A few good days may lay ahead but don't forget to take some profits." For more of the article read Earnings can make it or break it: overbought and oversold China stock list

It took time for the Street to digest internet and online game related news from last week. Shares of Shanda Interactive (NASDAQ:SNDA) collapsed exactly one week ago following earnings release. But as more earnings rolled in, investors realized that Shanda's numbers were not as bad as initially thought. Revenues increased and the lack of earnings growth from last quarter measured well compared to the rest of the sector - Giant Interactive (NYSE:GA) or Perfect World (NASDAQ:PWRD). For this reason  - besides being oversold -we picked Shanda Interactive (NASDAQ:SNDA) for the Weekly Stock List; and so far Advanced members are up +2.53% since Friday. We're of a view that more upside is on the road this week for SNDA.

Best & worst Chinese stocks on Monday at 12:34, sorted by $ change

Chinese internet stocks are shining today thanks to strong earnings from Sina Corp. (NASDAQ:SINA) last week. Revenue outlook from online advertisement looks promising in China, fueling share prices of online portals like Sohu.com (NASDAQ:SOHU) and Sina SCorp. (NASDAQ:SINA). Another evidence that online ad revenues are strong was evidenced by earnings from NetEase.com Inc. (NASDAQ:NTES), an online game developer and operator with a significant online ad presence. Had it not been for increased ad revenue, NEtEase.com (NASDAQ:NTES) would have reported profit slow down similar to Shanda Interactive (NASDAQ:SNDA).

Shares of Baidu.com (NASDAQ:BIDU) have advanced the most since her share price broke through the $500 mark. Baidu.com (NASDAQ:BIDU) is not overbought yet - according to the overbought monitor this morning - suggesting more upside is possible.

Shares of Chinese oil companies rose on Monday as the price of oil hit a record $82 dollars. Petrochina (NYSE:PTR), the largest Chinese oil producer, advanced $1.58 or +1.56% followed closely by CNOOC Ltd. (NYSE:CEO). Oil related Sinopec Shanghai Petrochemical (NYSE:SHI) jumped right at the open following profit related news. Related coverage: Chairman Sinopec Shanghai Petchem did not disclose the annual profit for year 2009.

There has been a lot of fuel behind China Automotive Systems (NASDAQ:CAAS) in the past, making this stock one of the most volatile among Chinese ADRs. But its hard to argue that auto companies are sloppy investment when auto sales soar in China. Policy makers in Beijing signaled today that that the stimulus exit will be gradual as trade surplus shrank, raising hopes that government stimuli to spur auto sales growth will stay in place for the first half of 2010.

Shares of City Telecom (NASDAQ:CTEL) are up +6.2% so far today - with no end in sight. Shares of the company advanced a staggering +544% in the past 52 weeks, making investors to wonder where the ceiling might just be. Chinavestor Growth portfolios benefited from part of this surge last year as we picked CTEL for the Growth portfolios for a couple of months.

Shares of Chinese solar makers are under water for today so far after soft earnings from Yingli Green Energy (NYSE:YGE) poured water over the head of overheated investors. While revenues and PV shipments rose the company reported a net loss for the last quarter of 2010, rattling nerves of investors if the sector's recovery is for real or not. But we're of a view that current sell-off is not justified because "The real reason that the company is in the red IS NOT SECTOR SPECIFIC!" Related coverage: Solar sector softens as YGE earnings sour.