Shanda Interactive (NASDAQ:SNDA) fell $1.70 on Thursday and is now trading under $47 at three month lows. All this on no specific news. Arch rival NetEase (NASDAQ:NTES) fell $4.81 or -10.31% to $41.48 following 2009 Q2 numbers. While both revenue and earnings rose, the stock got hit by an analyst downgrade citing low quality earnings. The weakness of the industry leader put additional pressure on Shanda, already weakened by lower expectations.
But based on the following oversold China stock indicator, Shanda (NASDAQ:SNDA) remains oversold and offers opportunity for the intelligent investor. It is clear that Shanda will pop, the only question is when. I personally expect Shanda to jump anywhere from 10%-20% in the next 5-10 trading days. But don't hold me accountable for this, since there is no guarantee. I'm just thinking out loud.
The sector that I'm bearish right now is Chinese solar stocks. JA Solar is oversold but for reason and I don't expect the stock to recover anytime soon. For the rest of the Chinese stock universe, see chart below.
Most oversold China stock list
Another set of Chinese stock that are worth looking at is the most overbought China stock list. China Automotive Systems (NASDAQ:CAAS) and WuXi Pharma (NYSE:WX) are beneficiaries of better then expected earnings and improved Q3 guidance. But according to the overbought indicator both are overbought and thus their short term upside is limited. Stocks that offer momentum and descent technicals include American oriental (NYSE:AOB) and E-House (NYSE:EJ). American oriental (AOB) got a lift from WuXi Pharma (WX) and is not supported by fundamentals. E-House is strong on its own merit and looks good for the short term.
Green Tech Corporation (NASDAQ:GRRF) has momentum and is not overbought yet- another stock with upside potential. The company reported better then expected 2009 Q2 results yesterday and is up 31% pre-market...
For a Chinese 2009 Q2 earnings calendar visit middle of page: http://chinavestor.com/newsletter/70795-august-2009-newsletter-earnings-season-is-on-investor-how-are-you-doing.html
China overbought stock list