Dec. 28, 2009 (Chinavestor) With only one China ADR dangerously overbought there is a lot of upside left for China stocks for Monday. Index futures suggest a positive open, helping momentum China stocks to do well in early morning trade. China Sky One Media (NASDAQ:CSKI) is overbought but might do well on a positive market day. But investors have to be careful with CSKI from now on. Cogo Group (NASDAQ:COGO) hasn't reached the theoretical highs yet suggesting more gains is possibly on the road ahead. UTStarcom (NASDQ:UTSI) fell on Friday with thin trade but advanced strongly for the week, suggesting more upside is highly likely. Yucheng Technology (NASDAQ:YTEC) had a long winning streak but is not overbought according to the following chart. China Automotive Systems (NASDAQ:CAAS) had a strong comeback last week with a lot of underlying volume. The stock is not overbought either.
Most overbought China stock list
On the oversold end of the Chinese stock universe we have China Mobile (NYSE:CHL) offering entry points for the value investor. GigaMedia Limited (NASDAQ:GIGM) fell off the cliff last week on weak Q3 numbers and is not expected to recover anytime soon. Linktone (NASDAQ:LTON ) is an oversold stock with a possibility to pop at any time.
Most oversold China stock list
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.