(Sept. 15, 2009 - Chinavestor) Focus Media (NASDAQ:FMCN) jumped 12.06% yesterday propelling the stock to the top of the most overbought China stock list. According to the indicator, Focus Media (NASDAQ:FMCN) became overbought - a bearish signal for the short term. KongZhong corp. (NASDAQ:KONG) is another China stock that made it to the danger zone. Looks as if the stock reached a resistance level and it will be difficult to fight it. Another stock that hit a resistance level is China Education Corp (NASDAQ:CAST) albeit the stock is not as dangerously overbought.
But some other Chinese stocks have accumulated sustainable momentum according to the overbought indicator. Sohu.com (NASDAQ:SOHU) had a strong day on Monday and is up 4.5% for the last five trading sessions, leaving room for further improvement.
Baidu.com (NASDAQ:BIDU) has been very strong, the ADR is up $36.23 or 10.55% just in the last five trading sessions, but as the overbought chart proves the stocks is not overbought yet, leaving more to the upside. Remember, Baidu.com (NASDAQ:BIDU) was trading above $400 already, so current price of $379.50 is not out of this world.
New Oriental Education (NYSE:EDU) has been strong and looks to have sustainbale momentum as well. But 51job Inc. (NASDAQ:JOBS) gave up some of the gains on Monday, signalling that the rally may have come to an end. Share price of 51job Inc. (NASDAQ:JOBS) advanced 12.11% in the last five trading sessions already.
Most overbought China stock list
Looking at the other end of the universe, the most oversold stock list, Linktone Ltd. (NASDAQ:LTON) is the only truly oversold ADR at the moment. this in turn offers opportunity for the risky investor, assuming LTON might pop up any time.
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.