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China stocks take a breather before Thanksgiving

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wind_4Nov. 25, 2009 (Chinavestor) Don't expect much action a day before Thanksgiving. Looking at the NYSE calendar, the markets will be closed tomorrow and open for a short session on Friday. This lack of interest comes thorough the overbought monitor as well except for two stocks: Origin Agritech Ltd. (NASDAQ:SEED) and Giant Interactive (NYSE:GA). Other Chinese stocks of interest for today include China Finance Online (NASDAQ:JRJC), China GrenTech Corp. (NASDAQ:GRRF), China Digital TV Holdings (NYSE:STV), and American Oriental Bioengineering (NYSE:AOB). UTI Starcom (NASDAQ:UTSI), Yingli Green Energy (NYSE:YGE) and Chinacast Education (NASDAQ:CAST) have experienced significant loss of momentum according to the oversold China ADR monitor.

 

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Origin Agritech (NASDAQ:SEED) jumped 114% in the last five trading days, a move obviously out of the scope of the overbought monitor. But the huge underlying volume on Monday and Tuesday suggests the rally is not over just yet, though a short term technical correction is a possibility. Origin Agritech (NASDAQ:SEED) moved after the news of the State approval to use their genetic modified corn. Q4 2009 Origin Agritech Ltd. (NASDAQ:SEED) Earnings Release is scheduled for Nov. 27, 2009 - Dec. 7, 2009.

Another stock of interest is Giant Interactive (NYSE:GA), the only NYSE listed Chinese online game developer and operator. Revenues and earnings fell from last quarter but rose compared to 2008 third quarter, a result that is below expectations. Remember, NetEase.com Inc. (NASDAQ:NTES) reported earlier the month and got punished for lack of growth - but that's still better then negative growth that Giant Interactive (NYSE:GA) reported. Shanda Games (NASDAQ:GAME) is scheduled to report third-quarter earnings on December 1st, next Tuesday at 9:30 P.M. after the close. Given that NetEase.com Inc.  (NASDAQ:NTES) and Shanda Games (NASDAQ:GAME) make up over 50% of the online game sector, Shanda's numbers will help put Q3 numbers of Giant Interactive (NYSE:GA) into perspective.

Another China play just reported earnings is China Finance Online (NASDAQ:JRJC). This small cap NASDAQ listed China ADR beat earnings by one cent and guided fourth quarter revenues in line. Yet is was not enough to keep it up post-market trading. China Finance Online (NASDAQ:JRJC) went down -$.25 or -2.73% after hours on Tuesday. Based on the overbought monitor below China Finance Online (NASDAQ:JRJC) has been trading within her trading range with no indication where the stock is going to move after earnings.

Most overbought China stock list

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Most of the action is taking place in the oversold end of the China ADR universe. UTI Starcom (NASDAQ:UTSI), Yingli Green Energy Holdings (NYSE:YGE), Sinopec Corp. (NYSE:SNP), and Chinacast Education Corporation (NASDAQ:CAST) have experienced a significant loss of momentum in the last five trading days. Most of these losses are technical in nature given their strong performance in the November 1-18 period. Sinopec (NYSE:SNP), Yingli Green Energy (NYSE:YGE) look good on fundamentals. Solar stocks have been particularly upbeat after big guns of the sector returned to profitability, signalling the end of the negative cycle. Chinacast Education Corp. (NASDAQ:CAST) guided Q4 revenues to the high end of previous estimates, a positive development. But UTI Starcom (NASDAQ:UTSI) has weak fundamentals evidenced by a 60.5% drop in revenues in the third quarter. This in turn suggests that while the trend is about to turn for Chinacast Education Corp. (NASDAQ:CAST), Yingli Green Energy Holdings (NYSE:YGE), and for Sinopec Corp. (NYSE:SNP), don't expect much positive development from UTI Starcom (NASDAQ:UTSI) in the medium run.

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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