(Oct. 1, 2009 - Chinavestor) NASDAQ listed China stocks continue to create excitement within the investor community. Smaller cap Chinese ADRs like China BAK Battery (NASDAQ:CBAK) continue to tower the most overbought China stock list. But every rally comes to an end eventually, and with a 63.37% run just in the last five days, CBAK is certainly in a danger zone.
Focus Media Holdings (NASDAQ:FMCN) is another China play that is worth paying attention to. The share price for Focus Media (FMCN) looks to be set above $11 level, but there is a lot of uncertainty going on after the Sina (NASDAQ:SINA) deal collapse. Focus Media Holdings (NASDAQ:FMCN) is trading above its trading range but is not horrible overbought - an indication that further upside is possible. But the fall from the grace on September 14 reminds investors that there is no sure bet on the stock market. Still, there is more to the upside for Focus Media (NASDAQ:FMCN) then to the downside at this point.
Sina Corporation (NASDAQ:SINA) sticks out of the crowd from a technical point of view. Share price of Sina corporation (SINA) advanced over 10% in the last five trading sessions but the stock is not overbought yet. Looks as if the failed attempt to acquire Focus Media (NASDAQ:FMCN) helped Sina as well, but there is more to the story. Sohu.com (NASDAQ:SOHU) spun-off her online game unit earlier this year, a success story that was repeated by Shanda Interactive (NASDAQ:SNDA) a week ago. Now Sina Corp. (SINA) is studying the chances of a similar move, spinning-off verticals in an attempt to raise cash. This anticipation is adding additional fuel for Sina's late rally.
Small cap Rino International (NASDAQ:RINO) continues to show strength despite a 60% run since September 15. While the stock price is not approaching the theoretical high on the chart, this info is deceiving and is a result of a short market history. The overbought/oversold indicator works best when a stock has at least 52 weeks market history, something that Rino is clearly missing. In other words, be very careful with RINO because above $20 the stock is under pressure.
Most overbought China stock list
The other end of the China stock universe presents opportunity for the value investor. While China Sunergy NASDAQ:CSUN) and ReneSolar (NYSE:SOL) top the most oversold China stock list, NYSE listed large cap value stocks are the ones that should be of your interest. China Telecom (NYSE:CHA) is an oversold value play, a stock that lost 15% since early August. But the stock is solid from a fundamental point of view and deserves better.
Daytraders should pay a close attention to American Oriental Bioengineering, Inc. (NYSE:AOB). This China play has been extremely volatile, creating opportunity for daytraders. American Oriental (AOB) lost over 20% since August 4 and shed over 10% just in the last seven trading sessions. When American Oriental Bio. (NYSE:AOB) catches fire, the stock price moves. So ready your self for a bumpy, but possible profitable, ride with American Bio (AOB).
Guangshen Rail (NYSE:GSH), Sinopec Shanghai Petrochemical (NYSE:SHI) and China Mobile (NYSE:CHL) complete the list of undervalued quality China plays.
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.