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Oversold China Stocks to Shine on Monday

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sunNov. 2, 2009 (Chinavestor) Chinese stocks offer excellent trading opportunities for the short term. Chinese manufacturing data suggests the Chinese economy is accelerating, fueling optimism that investing in China stocks remain a good bet despite volatile market environment. Stocks of interest for today include China Unicom (NYSE:CHU),  Baidu.com (NASDAQ:BIDU), China Southern Airlines (NYSE:ZNH), Sohu.com (NASDAQ:SOHU), and China Eastern Airlines (NYSE:CEA).

 

China Unicom (NYSE:CHU) is the most oversold China stock this morning, suggesting a possible turn around when markets are strong. But weakness in the Chinese telecom sector is not limited to China Unicom (NYSE:CH), but China Mobile (NYSE:CHL) is almost just as oversold and ready to rally on Monday. Don't expect as much of action from China Telecom (NYSE:CHA) this time.

Baidu.com (NASDAQ:BIDU) is not the most oversold, but declined so much in relative terms last week, that  a rebound is likely. For a list of the biggest losers of last week, see weekly roundup article on the home page. Baidu.com (NASDAQ:BIDU) is on the top of that list, making a case for a strong comeback.

Chinese airliners, China southern Airlines (NYSE:ZNH) and China Eastern Air (NYSE:CEA), are oversold. Both companies are priced below their trading envelope with a significant loss of momentum. But when markets rally, oversold companies typically outperform. just watch out for China south Air (NYSE:CEA) and China Eastern Air (NYSE:CEA) for today.

Sohu.com (NASDAQ:SOHU) is an oversold stock. The company lowered Q4 revenue guidance prompting a 16% drop in share price a week ago. But earnings were good for Sohu.com (NASDAQ:SOHU) and it looks as if markets over reacted to SOHU's weakness. Expect Sohu.com (NASDAQ:SOHU) to do well today.

Most oversold China stock list

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Looking at the most overbought China stock universe, it's hard to find a China stock with a momentum on the first place. Only NetEase.com (NASDAAQ:NTES), JA Solar (NASDAQ:JASO) and Asiainfo Holdings (NASDAQ:ASIA) ended the week higher of the Chinese stock universe. the only positive development from this list is JA Solar (JASO), a stock that made it to the "BUY" list on the weekly stock recommendation sent out to Chinavestor clients.


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Most overbought China stocks

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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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