Jan. 11, 2010 (Chinavestor) Strong market days favor momentum China stocks - and as such expect overbought Chinese ADRs to do well on Monday. The first six stocks on the overbought list are prime candidates for a strong showing; Ltd. (NASDAQ:NCTY), HQ Sustainable Maritime (AMEX:HQS), Qiao Xing Univ. (NASDAQ:XING), Sutor Technology (NASDAQ:SUTR), Solarfun Power Holdings (NASDAQ:SOLF), and Aluminum Corp. of China (NYSE:ACH). Hutc. Tel. (NYSE:HTX) is not expected to move - its due to a take over at a pre-set price. But investors have to have a strong stomach with these high risk/high return stocks.
If you want to know what stocks we like, scroll down to the "Weekly Stock Buy List" on the Premium Content page.
Most overbought Chinese stocks
Looking at the most oversold end of the China stock universe, Baidu.com (NASDAQ:BIDU), Chindex International (NASDAQ:CHDX), and Tongjitang Chinese Medicines (NYSE:TCM) are trading at a discount- relative to the rest of the market. Yucheng Technologies (NASDAQ:YTEC) is still trading at the upper end of her trading envelope and is not considered oversold yet.
Most oversold Chinese stocks
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.