(Aug. 21, 2009 - Chinavestor) Shares of Shanda Interactive (NASDAQ:SNDA) advanced $2.24 or 4.81% on Thursday, there is more to the upside according to the overbought/oversold indicator. Shanda has long been on the top of the most oversold China stock list but with a 5.45% rally in the last four trading day, the stock is off that chart. Instead, I got puzzled by looking at the most overbought China stick list this morning to see Shanda to appear on that list - see Shanda is fourth from the bottom of the following chart. Given the size of the move and the position of the arrow, it looks as if Shanda Interactive (NASDAQ:SNDA) has more upside potential left.
The same indicator suggests that while China Automotive Systems (NASDAQ:CAAS) has given back 7.95% in the last four trading days, the stock remains overbought. This is a bearish signal suggesting the correction may not be over just yet. other Chinese ADRs with notable momentum include, but is not limited to, WuXi Pharma (NYSE:WX), and AsiaInfo Holdings (NASDAQ:ASIA). Despite a big, $8.47 or 2.56% jump in the price of Baidu.com (NASDAQ:BIDU) on Thursday, the ADR remains neutral from a technical point of view.
Most overbought China stock list
Looking at the most oversold China stock list below, Chinese solar companies remain under the water. Suntech Power (NYSE:STP), the largest Chinese solar manufacturer, fell 3.72% on Thursday following weak 2009 Q2 numbers. This in turn hurts the rest of the sector, keeping pressure on JA Solar (NASDAQ:JASO), Trina Solar (NYSE:TSL) and Solarfun Holdings (NASDAQ:SOLF). JA Solar (NASDAQ:JASO) remains the most oversold among Chinese solar companies, presenting a possible pop up when momentum returns to the solar sector. E-house (china) Holdings (NYSE:EJ) remains a dark horse with huge uptick following Q2 earnings and an even bigger drop the next day.
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.