(Sept. 14, 2009 - Chinavestor) Despite strong economic reading from China last Friday, investors in Hong Kong became cautious citing concerns that Chinese stocks ran ahead of fundamentals. The Hang Seng Index fell 1.08% on Monday.
Looking at U.S. listed Chinese stocks on Monday morning, the mood is similar that of to Hong Kong. Not a single China ADR is technically overbought, but it is hard to find Chinese stocks with sustainable momentum. According to the following overbought China ADR list, the following stocks look good from a technical point of view on Monday morning .
- Baidu.com (NASDAQ:BIDU), the largest Chinese search egine company
- China Unicom (NYSE:CHU), China's second largest mobile carrier by subscriber base
- CNOOC Ltd. (NYSE:CEO), the offshore specialist from China
- Sohu.com Inc. (NASDAQ:SOHU), the web portal and major shareholder of Changyou.com (CYOU).
However KongZhong Corp. (NASDAQ:KONG) is screemeing after advancing over 30% in September and is ready for a plateau, at best.
Most overbought China stock list
Since September has been a very strong month so far, it is hard to find oversold Chinese ADRs at the moment. While small cap Linktone (NASDAQ:LTON) is on the top of the list, it is important to notice other stocks as well. Mid-cap Guangshen Rail (NYSE:GSH) is now below her trading range, something that value investors should pay attention to. Overbought UTI Starcom (NASDAQ:UTSI) is back from extremes and is not trading at a more rational range. JA Solar (NASDAQ:JASO) is away from the danger zone, offering less of a change for a quick price appreciation.
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.