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Huaneng and other China stocks to watch on Tuesday

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bottom_fishing_1Dec. 15, 2009 (Chinavestor)  Investors should think twice about overbought stocks when index futures point to a narrow open with a negative bias. But momentum stocks are here to do well just as selected oversold stocks are of interest for today. We have been saying that Huaneng Power (NYSE:HNP) is just about turning around - see yesterday's strong statement - and here we come: all three Chinese power generators outperformed in Hong Kong today despite a negative market environment. Expect HNP to outperform on the NYSE today and the rest of the week. It was prudent to put HNP on the "Weekly Stock Buy List" last Friday...Another stock we liked and told subscribers to buy last Friday was Yucheng Technologies Ltd. (NASDAQ:YTEC). The stock advanced 4.6% on Monday with heavy volume, suggesting money flows are going to support the stock for the rest of the week. But investors will have to watch out for YTEC and other overbought China plays today. Another hot stocks of the week is Shanda Games (NASDAQ:GAME) but as the overbought chart testifies, see bottom of chart, GAME has just caught up with parent Shanda interactive (NASDAQ:SNDA) and is far from overbought. Stocks to watch from the oversold list include China Mobile (NYSE:CHL) and Nam Tai Electronics (NYSE:NTE) for today.

General Steel (NYSE:GSI) is absolutely overbought and is ready for a pull back. JA solar (NASDAQ:JASO) is trading way above her trading range but is not as close to the theoretical highs as many other China ADRs. Chinese solar stocks have been very strong on Monday; Canadian Solar (CSIQ), China Sunergy (NASDAQ:CSUN), Suntech Power (NYSE:STP), LDK Solar (NYSE:LDK), just to name a few. But these stocks are not overbought yet suggesting more upside is on the way.

Most overbought China stock list

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finding stocks for bottom fishing is easy thanks to the oversold indicator. Huaneng Power (NYSE:HNP) is the most oversold China ADR at the moment and given her strong performance in Hong Kong this morning, HNP is going to do well for the rest of the week. We just told yesterday that "This suggests a technical correction is imminent and expect HNP to do well for the rest of the week as well." Hope you listened... Another stocks we highlighted was China Mobile (NYSE:CHL), another value play at bargain prices. Just watch... Stocks we warned you not to touch was Tiens Biotech (AMEX:TBV), a good call given her fall of -9.9% on Monday. Nam Tai Electronics (NYSE:NTE) is another "no go" for Tuesday.

Most oversold China stocks 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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