Nov. 30, 2009 (Chinavestor) Chinese stocks swung back in Asia on Monday following the dramatic drop last Friday. Chinese ADRs to watch out on Monday include Origin Agritech (NASDAQ:SEED), 51job Inc. (NASDAQ:JOBS), Baidu.com (NASDAQ:BIDU), Rino International (NASDAQ:RINO), Linktone Ltd. (NASDAQ:LTON). WuXi PharmaTech (NYSE:WX) from the overbought indicator and ChinaCast Education (NASDAQ:CAST), Tongxin International (NASDAQ:TXIC), and China Mobile (NYSE:CHL) from the oversold monitor.
We highlighted China Mobile (NYSE:CHL) as a compelling value play on November 16 in the "WSJ Wrong on China Smartphones" article. We also had China Mobile (NYSE:CHL) in the "Weekly Stock Buy and Sell List" recently just to see it pop 34.84% after hours trading on Friday. While China Mobile H-shares in Hong Kong (HKG:0941) only advanced 1.18% on Monday, suggesting the after hours price is unlikely to gain traction on Monday, there is a lot of action going on with the stock.
WuXi PharmaTech (NYSE:WX) is technically the most overbought China security at the moment as the ADR 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. However considering the following two factors,e.g. the rally is fundamentally driven rally and secondly the strong technicals on Black Friday, WuXi PharmaTech (NYSE:WX) looks good before the bell on Monday. Remember how WuXi PharmaTech (NYSE:WX) opened lower on Friday but came back strong ending the day $.29 or 1.85% higher.
Another stock with a strong comeback last Friday and with a spectacular 125% jump for the week is Origin Argitech (NASDAQ:SEED). The jump last Monday is based on fundamentals and the heavy underlying volume throughout the week is a strong statement that the stock has lot of support. Expect another good week for Origin Agritech Ltd. (NASDAQ:SEED).
The following four stocks look good from the overbought indicator this morning: 51job Inc. (NASDAQ:JOBS), Baidu.com (NASDAQ:BIDU), Rino Int. (NASDAQ:RINO) and Linktone (NASDAQ:LTON). All these NASDAQ listed China plays seem to have sustainable momentum, are far from the theoretical high level and are trading just above the trading envelope.
Most overbought China stock list
Most of the action is taking place in the oversold end of the China stock universe. ChinaCast Education (NASDAQ:CAST) is the most oversold China play at the moment, followed by Tongxin International (NASDAQ:TXIC). Both companies have been doing very well since March 2009 and seem to be suffering from profit taking lately. TXIC and CAST delivered robust Q3 results, reassuring investors that their bet was sound, but may lack short term catalyst for the time being.
Most oversold China stock universe
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.