Jan. 15, 2010 (Chinavestor) A one day correction of Chinese solar stocks is not enough to make the sector oversold - but is certainly a development worth paying close attention to. Trina Solar (NYSE:TLS) fell -11.76% on Thursday followed closely by JA Solar (NASDAQ:JASO) and Solarfun Holdings (NASDAQ:SOLF). But large cap LDK Solar (NYSE:LDK) remained resilient suggesting the bloodbath might not be as severe. As far as the overbought and oversold indicator goes for Friday, Baidu.com (NASDAQ:BIDU), City Telecom (NASDAQ:CTEL), China Life Insurance (NYSE:LFC), E-House Holdings (NYSE:EJ) and Chindex International (NASDAQ:CHDX) are stocks of interest. An important development of the last few days is the dramatic change in Baidu.com (NASDAQ:BIDU). The stock went from the most oversold China ADR to the most overbought just in three days, a phenomena without precedent. But while we pointed out that BIDU was not oversold on Thursday and thus had some upside left, the picture is different on Friday. BIDU is trading at the theoretical highs and thus is ready to take a break.
City Telecom Ltd. (NASDAQ:CTEL) is another stock that seems to be stretched too thin and is ready to take a breather on Friday - according to the overbought monitor below.
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Most overbought China stock list
Stocks of interest from the oversold monitor this morning include China Life Insurance (NYSE:LFC), the largest Chinese life insurer. A large cap blue chip like LFC doesn't stay oversold for long, suggesting bottom fishing opportunity is here. Shanghai Listed A-shares of China Life (SHA:601628) rose 0.9% on Friday, just as did most real estate companies. The Chinese real estate sector is oversold on credit concerns but have hit bottom in Shanghai and bounced back off strongly on Friday. E-House Holdings (NYSE:EJ) is an oversold China real estate play that might start cheering up investors string from today.
Chindex International (NASDAQ:CHDX) is another oversold play that is worth paying attention to on Friday. CHDX seems ripe for bottom fishing as well.
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.
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