(Sept. 3, 2009 - Chinavestor) As published yesterday, Chinese stocks have clearly lost their shine lately. While it is hard to find any China stock with momentum, the list of oversold China stocks is well populated. And while Guangshen Rail (NYSE:GSH) remains oversold, two smaller cap NASAQ stocks catch our attention this morning: The9 Limited (NASDAQ:NCTY) and UTI Startcom (NASDAQ:UTSI). As the following oversold China stock list testifies, The 9 Ltd. (NASDAQ:NCTY) slipped the most in relative terms - except for Sinovac (AMEX:SVA). But don't count Sinovac in this time because her extreme volatility this week - up 53% one day and down 18% yesterday - disqualifies it. Any serious investor should not touch Sinovac (AMEX:SVA), her extreme volatility is irrational and highly speculative.
Most oversold China stock list
Finding Chinese stocks with strong momentum is a difficult task this morning. Only Hurray Holdings (NASDAQ:HRAY), this small cap wireless value added service provider (ring tones) is trading higher compared to last week. But the stock is far from overbought and low underlying volume suggests it will not move any higher anytime soon.
But as always, should market sentiment improve, quality Chinese stocks show their true color and rally very fast. With a strong rally in Asia and U.S. futures pointing to a higher open, expect oversold blue chips to make up for previous losses.
Most overbought 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.