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China stock and the jobs report

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cash1Nov. 6, 2009 (Chinavestor) With index futures in a narrow range ahead of key jobs data, China stock investors are left with technical indicators to start the trading day. The only China stock to report today is UTI Starcom (NASDAQ:UTSI) that reported Q3 numbers before the bell. New stocks of interest include Guanghen Rail (NYSE:GSH), COGO Group (NASDAQ:COGO), China Petroleum & Chemical Corp. (NYSE:SNP) from the overbought list, and China Mobile (NYSE:CHL), and China Eastern Airline (NYSE:CEA) from the oversold list.

Looking at the most overbought China stock list first, WuXi Pharma (NYSE:WX), China Automotive Systems (NASDAQ:CAAS) and Yanzhou Coal (NYSE:YZC) continue to dominate. If these stocks are going to be able to maintain momentum depends largely on market sentiment. A strong market is going to carry these stocks higher but will punish them hard if jobs report fails to impress investors.

Guangshen Rail (NYSE:GSH) reported Q3 numbers are have caught fire. This low volume, under represented mid-cap China play is a low risk stock. It operates in the Pearl River Delta region, economically the most vibrant region in China, has dominant position and solid operation. Guangshen Rail (NYSE:GSH) is profitable, pays dividend and might add value for any low key portfolio.

Strength of China Life Insurance (NYSE:LFC) comes handy for Chinavestor subscribers. We recommended to buy China Life (LFC) last Friday 3:30 when it was $68.75. An email alert to SELL LFC was sent out to clients on Wednesday at 11:30. Another stock we told subscribers to buy last Friday and then issued a "SELL" alert on Wednesday was China Finance Online (NASDAQ:JRJC). And for today, we just sent out a "SELL at the Open" email alert for COGO Group (NASDAQ:COGO), another excellent play for he week. All three stocks were on the "Weekly Stock List" sent out to clients last Friday.

It's Friday again, time to send out the "Weekly Stock List" update at 3:30 today. If you want to know what other stocks we have on the list, SIGN UP forAdvanced Membership now. For detailed description of subscriber benefits, please visit "Premium Content" page.

Strength of China Petroleum & Chemical Corp. (NYSE:SNP) is unusual for such a large cap stock. Despite a sizable move for Sinopec (NYSE:SNP), the stock is still just within her normal trading range, suggesting there is more left to the upside.

Most overbought China stock list

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The most oversold list reflects on the strength of the rally. There is no truly oversold China stock at the moment, what is reflected instead is the speed China stocks move away from the oversold position. China Eastern Airline (NYSE:CEA) and China Southern Airline (NYSE:ZNH) were both oversold earlier this week, something we highlighted saying it is time to pick up some undervalued assets. China Eastern Air (NYSE:CEA) had a very strong market day on Thursday, advancing 9.78% on the NYSE. No wonder CEA is off the list today.

Another stock we highlighted was China Mobile (NYSE:CHL). This is another under valued China play  that should not be there. China Mobile (NYSE:CHL) is slower to pick up momentum but that is going to come. I still believe CHL is a bargain under $50. Weakness of the whole Chinese telecom sector puts pressure on China Mobile (NYSE:CHL) but that will not last forever.

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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