(Aug. 18, 2009, Chinavestor) Small cap Chinese stocks has experienced extreme volatility in the last few days. Positive earnings announcement propelled China Automotive Systems (NASDAQ:CAAS), WuXi Pharma (NYSE:WX), China Tech Faith (NASDAQ:CNTF), China GreenTech (NASDAQ:GRRF) and other China stocks up double digits on earnings day. Chinavestor's overbought/oversold indicator raised a red flag for some of these companies citing technical concerns - e.g. when we thought a stock has gone up too much too fast. So when a market correction came - like on Monday - momentum dried up quickly. But Tuesday looks to be a good day to gauge how much momentum these small cap stocks really have. a very positive sign would be if they resumed a rally. But those are in trouble that will lack momentum on Tuesday.
Most overbought China stock list
Looking at he most oversold China stock list below, JA Solar (NASDAQ:JASO) and Shanda Interactive (NASDAQ:SNDA) are on the top of the list. JA Solar (JASO) is there on solar weakness and dismal earnings report but Shanda is a victim of weaker online game sector performance and speculation, no company specific news. Both stocks are oversold and should recover.