Jan. 4, 2010 (Chinavestor) Index futures point to a higher open for American equities, making a case for Chinese ADRs. Expect momentum China stocks to outperform under such market conditions. Momentum stocks of interest include American Oriental (NYSE:AOB), Fushi Copperweld (NASDAQ:FSIN), Advanced Battery Technologies (NASDAQ:ABAT), AgFeed Industries (NASDAQ:FEED), Vimicro Int. (NASDAQ:VIMC), and Zhongpin Inc. (NASDQQ:HOGS). We have the following interesting stocks on the oversold end of the China stock universe: China Finance Online (NASDAQ:JRJC), CNinsure (NASDAQ:CISG), and China TechFaith Wireless (NASDAQ:CNTF).
American Oriental Bioeng. (NYSE:AOB) is trading the closest to theoretical highs according to the overbought indicator. Yet the stock price has more room to go before it gets overbought based on experience. Expect AOB to shine today.
Fushi Copperweld (NASDAQ:FSIN) broke through the $9 resistance level with heavy volume, suggesting more upside is on the way.
Advanced Battery (NASDAQ:ABAT) is less persuasive at the moment despite a strong showing on the overbought monitor. Extreme volatility makes t hard to predict where the stock is going to go from here.
AgFeed Industries (NASDAQ:FEED) is very similar to Fushi Copperweld (NASDAQ:FSIN) from a technical point of view. FEED caught fire in the last two days of trading with heavy volume - a perfect recipe for a strong showing on Monday.
Vimicro Int. (NASDAQ:VIMC) advanced 7.71% on Thursday but it's hard to tell if that one day momentum is here to stay. Nevertheless this stock has potential - but investors have to exercise extreme caution with this stock on Monday.
Zhongpin Inc. (NASDAQ:HOGS) have been strong in the last five trading days but came under heavy selling pressure once it broke through the $16 resistance level. Nevertheless it looks that Monday is the day to give it another try and stay above the $16 level.
Most overbought China stock list
Looking at the oversold end of the China stock universe, CNinsure (NASDAQ:CISG) is on the top of the list. The stock fell on Wednesday but made a recovery a day after suggesting investors are still trying to figure out where the stock is going to go. Given that insurance companies, among others, dragged down the Shanghai Composite index on Monday, outlook for CISG is bleak.
China TechFaith Wireless (NASDAQ:CNTF) has been steadily eroding for a month and is getting oversold. But it's till early to say if CNTF has hit the bottom.
China Finance Online (NASDAQ:JRJC) doesn't look too promising either. While the stock shed 8.06% in the last five trading days, it looks as if it hasn't reached the bottom just yet.
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.