(Oct. 6, 2009 - Chinavestor) Despite a strong market day on Monday, only a few Chinese ADRs are showing up on the overbought monitor.
Hurray! Holding Co. (NASDAQ:HRAY) continued to advance and is now up 18.5% just in the last five trading days. The stock is clearly overbought and a significant correction looms over HRAY, according to the overbought China stock indicator below.
Focus Media Holding (NASDAQ:FMCN) had a very strong rally on Monday and remains on fire. Given the longer term momentum Focus media has accumulated, there is upside left for FMCN, at least for the short run. Last time I elaborated on Focus Media was on September 30, saying "Focus Media (FMCN) is not terribly overbought at this point, leaving room for moving to either direction." Again, there is upside potential for this stock despite a strong showing.
Rino International (NASDAQ:RINO) jumped another 10% on Monday with heavy underlying volume. This is a very strong bullish sign but remember, the stock has advanced 70% since September 21! Every rally comes to an end eventually, and so Rino will have to pause at one point. The nice thing would be to know where the pause is going to be - but at this point it's everybody's guess. Based on the overbought monitor, Rino Int. (NASDAQ:RINO) is trading well above her trading range, making investors leery. If you made money off Rino International (RINO), my advice is to take profits off the table. Investors might gain another 5%-10% today, assuming we're going to have a strong market day, but timing will get just more difficult as we go along. Remember, there is nothing wrong with taking profits.
E-house (China) Holdings Ltd. (NYSE:EJ) has a strong showing on the overbought monitor today and for a reason. While the stock price advanced 3.4% on Monday, current price of $21.65 is just above the normal trading range for E-House (EJ). Considering that the Claymore/AS china Real Estate ETF (NYSE:TAO) is trading at a discount relative to the Hang Seng Index, Chinese real estate has a lot of room left. This makes a strong case for E-house Holdings (NYSE:EJ) besides a strong position on the overbought chart below. Based on historical developments, E-House can clear the $22 mark easily should market sentiment remain strong on Tuesday.
Most overbought China stock list
The other end of the China stock universe, China Sunergy (NASDAQ:CSUN) remains the most oversold China stock today. But with a two day advance behind it, CSUN looks to have bottomed out at $4.00. However Chinese solar companies are hurt by the weakness of the whole sector, thus don't expect China Sunergy (NASDAQ:CSUN) just to pop up from one day to the next. Instead, it will gradually improve when investors revisit the undervalued solar sector. With price of oil creeping higher, solar stock investors are going to have a strong case soon. All said, China Sunergy Co. Ltd. (NASDAQ:CSUN) looks to be a bargain at current $4.18 price.
The rest of the oversold stocks are hunted by weak performance over the last week and don't mean those stocks are going to go any lower. It is best interpreted as when market sentiment turns positive, under performers will have to catch up with the rest of the market, thus presenting significant upside potential for the value investor. These stocks will not pop up suddenly, but give patient investors above average returns over a course of a few weeks.
Most oversold China stock list