(Aug. 20, 2009 - Chinavestor) Chinese ADRs look very attractive ahead the bell on Thursday from a technical point of view. The number of overbought Chinese shares has been reduced to one, and that one has been on the retreat as well. China Automotive Systmes (NASDAQ:CAAS) experienced a bumpy ride following second quarter earrings. we pointed out in previous overbought/oversold reports that the stock just ran up too much too fast, and thus a technical correction was due. According to today's reading, CAAS is still overbought, so just exercise caution when dealing with this China stock today. the rest of the China ADR universe looks very attractive.
Most overbought China stock list
Looking at the most oversold Chinese stocks for today, there is not a single one that is 100% ripe for a comeback. JA Solar (NASDAQ:JASO), China Digital TV Holdings (NYSE:STV) and small cap Linktone Ltd. (NASDAQ:LTON) are certainly oversold but their fundamental weakness can keep them under pressure for the upcoming days.
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.