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China stocks to ride the wave

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wave1(Oct. 8, 2009 - Chinavestor) Better then exacted report from Alcoa (AA) helped the DJIA to hang on to previous sessions' gains while Chinese ADRs continued to advance.

Baidu.com (NASDAQ:BIDU) advanced another double digit gain following Tuesday's $19.11 jump. Altogether Baidu.com is up 10% or over $38 for the week, raising questions how long Baidu can go? According to the overbought monitor, short term upside is limited for Baidu.com (NASDAQ:BIDU) as the stock is getting overbought. It is now in line with other overbought stocks that came to a halt eventually.

 

Focuse Media Holdings (NASDQ:FMCN) was a bit more overbought yesterday when it came to a stop. If Baidu.com (BIDU) can keep going higher, surpassing FMCN is a good question. But if it does, and it is more then likely given the strong index futures this morning, then just know that selling BIDU at the end of the day might be a good strategy to pursue today.

Hurray! Holdings (NASDAQ:HRAY) hit a wall after the big run. Just anther stock, similar to Baidu.com (NASDAQ:BIDU), from the overbought chart below.

Sina Corp. (NASDAQ:SINA) isanother stock that's worth paying attention to. The stock is up 6% this week and though it paused on Wednesday, strong market sentiment may carry it higher on Thursday. Sina Corp. (SINA) looks just as overbought as Baidu.com for the first sight but notice that the strength of Sina corp. (NASDAQ:SINA) comes from a more steady rally and not a 2 day 10% jump. This in turn is a bullish statement and thus Sina may do well on Thursday.

AsiaInfo Holdings (NASDQ:ASIA) is similar to Sina Corp. (SINA), they might just trade in tandem. Should markets extend the rally on Thursday, ASIA has a good chance to take part of the rally.

Global economic recovery makes a strong case for commodities as well, helping energy stocks like Petrochina (NYSE:PTR) and CNOOC Ltd. (NYSE:CEO) to do well. Though Sinopec (NYSE:SNP) is not on the chart, Asia's largest refiner is just as much of a good play on Thursday then CEO or PTR.

When it comes to Petrochina (NYSE:PTR), don't miss out on the Morgan Stanley China (NYSE:CAF) ETF that tracks the Shanghai composite. since Petrochina is an index heavy weight of the Shanghai Composite, an index that CAF tracks, this ETF has been another good play this week.

Most overbought China stocks

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Most action is taking place on the overbought chart this week. But as the rally unfolds, oversold China plays have started to move up from the oversold position. Aluminum Corp. of China (NYSE:ACH) is one of them, but other value stocks that we have been highlighting last week as "bargain hunting opportunities" are on the move as well. Take a look at China Telecom (NYSE:CHA) as an example.

China Sunergy (NASDAQ:CSUN) has been long oversold but with strength coming back to the sector, this stock might pop. So just keep your eye on CSUN if you're willing to take on some risk because a handsome reward might be just a step away.

Most oversold China stock list

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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.



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