(Oct. 14, 2009 - Chinavestor) With index futures up following Intel's earnings and upbeat outlook, Chinese ADRs are set to do well on Wednesday. While CAAS has been extensively covered, the emergence of two Chinese oil majors, CNOOC Ltd. (NYSE:CEO) and Petrochina (NYSE:PTR), is somewhat a surprise. The most overbought stock list is populated with smaller cap NASDAQ listed China stocks typically but with oil climbing to over $74 a barrel, a new 2009 record, Chinese energy companies have strong backing. While CNOOC Ltd. (NYSE:CEO) is more overbought then Petrochina (PTR), strong momentum may well be able to carry this off-shore producer higher on Wednesday. For a large cap stock such as Petrochina (NYSE:PTR), the top four spot is highly unusual, but PTR is not overbought yet and has more upside potential left as well.
High oil prices always make a case for solar companies. Trina Solar (NYSE:TSL) has been on the radar screen for a couple of days but now we have LDK Solar Co. (NYSE:LDK) in addition. While LDK Solar (NYSE:LDK) showed weakness on Tuesday and shed $.09, this is not indicative of today's performance. LDK is just about to trade at the low end of her trading envelope, leaving a lot of room for additional upside. With oil at 2009 record, LDK Solar Co. (NYSE:LDK) is set to do well today.
Rino International (NASDSQ:RINO), a smaller cap NASDAQ listing, has been on fire since her IPO earlier this year. RINO keeps hitting new records and is now trading above $25 for the first time. By looking at the overbought indicator, Rino International (NASDAQ:RINO) is somewhat in the danger zone because current stock price is way above her trading range. The fact that trading range is far from the overbought level is somewhat misleading and is only a result of a short stock market history for RINO. With index futures pointing to a strong open, expect RINO to do well today, but every rally comes to an end eventually.
Most overbought China stock list
When it comes to the most oversold China ADR list, NetEase.com (NASDAQ:NTES) has significantly pulled back from the oversold danger zone. We pointed out that NetEase.com was screaming on Tuesday and was ready to turn around. With a strong 5.9% run yesterday, NTES just did that. And now with a strong market on its back, expect NetEase.com (NTES) to continue to come off recent lows and set fire for the rest of the online game sector.
American Oriental (NYSE:AOB) is oversold but if turnaround time is here is a good question. At this point further weakness is just as much of a possibility as a rally.
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.