Sinopec Corp. (SNP), Asia's largest refiner, traded up $4.88 at one point on Monday just 22 cents from its close at $77.45. The stock was propelled by news that gasoline prices are expected to increase in China, improving profitability for China's oil giant. This almost $5 jump in a day is the fourth best rally for the stock in 2009. What is interesting that following such a large advanced, Sinopec reversed course the next day seven times out of nine instances shedding $-1.23 the next day, on average.
To see the rest of those days when Sinopec had a great day, take a look at the following price chart.
The other factor not mentioned in the news is that Sinopec was one of the most oversold Chinese stock as we pointed out in the last four "Overbought/Oversold" (OBOS) reports - see under "Technical Analysis" tab. Using Chinavestor's OBOS indicator, we made a case for four stocks last Tuesday and reinforced on Thursday in article Shanda Pops, who's next?: China Telecom (CHA), Baidu.com (BIDU), Sinopec (SNP) and Yanzhou Coal (YZC). As the following screenshot from Google finance testifies, all four stocks well outperformed the DJIA or any other benchmark.
- China Telecom (CHA: Quote, Profile, Research) (0728.HK: Quote, Profile , Research) is up 10.3% since we highlighted the stock. Strong fundamentals suggest there is more room left.
- Sinopec Corp (0386.HK: Quote, Profile , Research)(SNP: Quote, Profile, Research) (600028.SS: Quote, Profile , Research) is up 8.2% including today's pop. Even though the stock is theoretically far from overbought, there is not much left for this large cap stock after such a big gain in just a few days.
- Baidu.com Inc. (BIDU: Quote Profile Research) is up 7.6% since we highlighted the stock just 5 days ago. The stock is fundamentally solid and is not overbought yet. Bidu has more room to go.
- Yanzhou Coal (1171.HK: Quote, Profile , Research) (YZC: Quote, Profile , Research) is up 14.5% since last week and think the stock might take a breather before resuming any uptrend.
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