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China stocks shine after earnings

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advance_10(Oct. 26, 2009 - Chinavestor) Stocks of interest beyond the obvious include China GreenTech Corp. (NASDAQ:GRRF) and Baidu.com (NASDAQ:BIDU) from the overbought chart and Suntech Power Holdings (NYSE:STP) and China Mobile (NYSE:CHL) from the oversold China stock list.

 

Baidu.com (NASDAQ:BIDU) advanced $19.71 on Friday to $435.31, a new 52 week high. Despite a strong showing for the week and for Friday, BIDU is NOT OVERBOUGHT, leaving more room for growth. Baidu.com (NASDAQ:BIDU) is trading above her trading range but is far from the theoretical high, a very bullish sentiment.

 

A similarly significant advance is apparent for China GreenTech Corp. (NASDAQ:GRRF) for the week, but most of the gains were registered on Tuesday. Trading of GRRF has been very choppy, huge jumps like on Aug. 13 were followed with price erosion. This may be the case this time as well, so don't expect much from China GreenTech (NASDAQ:GRRF) today.

China Automotive Systems (NASDAQ:CAAS) remains on the top of the overbought chart, but again, as long as market sentiment remains positive, CAAS has more upside potential.

Chinese oil companies are subject to the fluctuations in crude price. CNOOC ltd. (NYSE:CEO) is not overbought but lost momentum as crude subsided. But a weak dollar helping commodity prices go higher, CNOOC ltd (NYSE:CEO) has more room to go.

Yanzhou Coal (NYSE:YZC) (SHA:600188) jumped 3.3% in Shanghai on Monday following regulatory approval for acquiring Felix Resources off Australia. Expect a strong showing of YZC on the NYSE today.

China Life Insurance (NYSE:LFC) is poised to do well after reporting a net income increase of 154% compared to 2008 Q3. Chinavestor subscribers got an early lucky break with LFC this morning because China Life made it to the "Weekly Stock List" last Friday. Assuming they bought LFC as instructed, they're up for a good start for the week.

If you want to know what stocks we picked for this week, SIGN UPforAdvanced Membership now. For detailed description of subscriber benefits, please visit "Premium Content" page.


Most over bought China stock list

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Looking at the most oversold list, large cap China Mobile (NYSE:CHL) is important to pay attention to. Chinese carriers reported September subscriber statistics on Monday, causing shares of China Mobile (NYSE:CHL), China Telecom (NYSE:CHA) and China Unicom (NYSE:CHU) to slip. While China Unicom was particularly weak, China Mobile (NYSE:CHL) reported a small net income increase and strong 2G subscriber growth. All said, value investors have an unappreciated gem here in my judgment. China Mobile (NYSE:CHL) under $50 is bargain!

Suntech Power Holdings (NYSE:STP) is another undervalued stock. The whole Chinese solar sector is cheap and valuations are based on Q2 earnings. However that was the bottom for the sector and with the price of oil around $80/barrel, there is a strong case for Chinese solar companies. Suntech Power (NYSE:STP) is an industry leader with a market cap of over $2 billion. On the same note, Solarfun Holdings (NASDAQ:SOLF) and JA Solar (NASDAQ:JASO) are way oversold and beat up, ready for a comeback any minute. Just watch!

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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