(Aug 28, 2009 - Chinavestor) Chinese stocks have been trading water lately as large cap NYSE listed China ADRs continue to report earnings. The Chinese telecom sector is now complete with China Unicom (NYSE:CHU) reporting yesterday. But NASDAQ listed Shanda Interactive (NASDAQ:SNDA) has continued to creep higher before the earnings announcement scheduled for September 3.
Looking at the China stock universe from a technical point of view, there is not a single China stocks that is overbought. Stock with noticeable momentum include UTStarcom (NASDAQ:UTIS), WuXi Pharma (NYSE:WX), and The9 Ltd. (NASDAQ:NCTY). Shanda (NASDAQ:SNDA) is not on the screen but is clearly on the rise.
Most overbought China stock list
JA Solar (NASDAQ:JASO) continues to top the most oversold China stock list and it looks as if the stock might have found the bottom at $3.50. Stock to watch out for include AsiaInfo Holdings (NASDAQ:ASIA), Guangshen Rail (NYSE:GSH) and volatile Aluminum Corp. of China (NYSE:ACH). These stocks have experienced a significant loss of momentum and thus are vulnerable.
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.