(Oct. 19, 2009 - Chinavestor) This week is all about earnings and the Housing Market index on Tuesday. It's true to China ADRs as well because American market sentiment can override any other China related news. Index futures point to a higher open on Hasbro's strong earnings ahead the bell. Other heavy weights to report today include Boston Scientific, Apple and Texas Instruments.
Yet it's hard to deny the usefulness of the overbought / oversold report when it comes down to stock level. Assuming a strong market day, overbought stocks have a moderate chance to extend rally while not overbought but China stocks with strong momentum are poised to do well.
Looking at the most overbought China stock report below, WuXi PharmaTech Inc. (NYSE:WX) is looking good today. WX is not really overbought and with strong underlying volume on last Thursday and Friday, WuXi PharmaTech is poised to do well on Monday.
Unlike WuXi PharmaTech. Inc., Focus Media Holdings (NASDAQ:FMCN) has a longer term momentum going on, evidenced by the fact that the complete arrow is above the blue band or the trading envelope. FMCN has been on fire for over a month following news that SINA gave up on acquiring the core assets of the company. This in turn make a strong case for Focus Media where investors have to find the true value of the company.
With a 42% run last week, Hurray! Holdings (NASDAQ:HRAY) made it to the list as well. Despite a strong showing, HRAY is not overbought just yet but is clearly trading above it normal trading range. Assuming a strong market day ahead, stocks like WuXi, FMCN and HRAY are all poised to do well on Monday.
China's oil producers Petrochina (NYSE:PTR) and CNOOC Ltd. (NYSE:CEO) rode on the back of strong crude price, a trend that is more likely to take some break. While there is less visibility for over the long run, don't expect much from PTR or CEO today.
Linktone Ltd. (NASDAQ:LTON) jumped over a staggering 50% at one point last Thursday but has started to come back from the stratosphere. Chinavestor Advanced Members had a reason to cheer because Linktone (NASDAQ:LTON) was put on the "BUY" list last Monday, followed by a "SELL" email alert on Thursday.
LTON became the most overbought stock by Friday morning,but has dropped down the list significantly since then.
Most overbought China stock list
Looking at the other end of the spectrum, e.g. most oversold China stock list, the high number of Chinese solar stocks is apparent. Considering that the price of the crude is trading above $75 a barrel, the whole Chinese solar sector remains undervalued. Two Chinese solar companies made it to the "BUY" list for this week. If you want to know which ones, please sign up for Advanced Membership Now.
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.