March 10, 2010 (Chinavestor) Momentum is back for China stocks as is evidenced by the full house on the overbought monitor this morning. Sharp advance in the prices of China Southern Airlines (NYSE:ZNH) and China Finance Online (NASDAQ:JRJC) suggests that these securities became overbought. E-House Holdings (NYSE:EJ) is looking good on the chart despite trading sideways on Tuesday, thanks to a strong rally a day before. Fushi Copperweld (NASDAQ:FSIN), China Telecom (NYSE:CHA) and Vanceinfo Technologies (NYSE:VIT) are among stocks of interest from the overbought chart for today.

China Digital TV Holdings (NYSE:STV) is on the top of the overbought chart this morning, suggesting the security became overbought and is ready for a pullback. Remember, 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 Southern Airlines (NYSE:ZNH) advanced +16.61% on Tuesday and was the best performing component of the Hang Seng Index on Wednesday, suggesting more upside is on the way for the stock. But investors have to keep in mind that large cap stocks don't stay overbought for a long time - as was the case with China Eastern Airlines (NYSE:CEA) in late February or with China Telecom (NYSE:CHA) just last week.

Share price of China Finance Online (NASDAQ:JRJC) have advanced over +15.9% since last Wednesday pushing the stock into the overbought category. The company is schedule to report earnings on March 16 and current run up ahead of earnings looks premature. But small cap China stocks are volatile in nature and with so much of a run up lately, upside potential is outweighed by downside risk at this point in our opinion.

Fushi Copperweld (NASDAQ:FSIN) has just reported before the bell on Wednesday. Expectations ran high before the earnings for the company based on the overbought chart below. The company reported significant Q4 improvement from a year ago but it would be immature to comment much on the fundamentals before a thorough analysis.

VanceInfo Technologies (NYSE:VIT) has been trading above her trading range for over a week suggesting a slow down in stock price growth is likely to come.

Most overbought China stock list

Shares of Vimicro International (NASDAQ:VIMC), VisionChina Media (NASDAQ:VISN), and American Dairy (NYSE:ADY) have bottomed out, based on the oversold chart below. Chances are that Vimicro Int. (NASDAQ:VIMC) is going to bounce back but don't expect much improvement for VISN or ADY just yet.

WuXi Pharma (NYSE:WX) is a new addition to the oversold monitor this morning. The company failed to impress investors with her 2009 Q4 results yesterday. Related story: WuXi Pharma lacks growth, promises more.

Another newcomer to the oversold chart is E-House Holdings (NYSE:EJ), a Chinese real estate related company. E-House Holdings (NYSE:EJ) reported robust growth and issued a higher 2010 Q1 guidance yesterday but failed to gain traction. Related story: Banner year for EJ with cash dividend.

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.