Feb. 8, 2010 (Chinavestor) Technical indicators are useful to a certain degree. When markets are trading at extremes, e.g. after a substantial fall or a rally, technicals will help investors separate darlings from the dogs. This is the case for China stocks at the moment - the oversold list is full of names while the overbought end lacks action - except for Baidu.com (NASDAQ:BIDU).
Stocks mentioned in this report include Origin Agritech (NASDAQ:SEED), China Automotive Systems (NASDAQ:CAAS), HSBC Plc. (NYSE:HBC), Aluminum Corp. of China (NYSE:ACH), WuXi Pharma (NYSE:WX) and Shanda Games (NASDAQ:GAME).
Looking at the oversold part of the China stock universe this morning, Origin Agritech (NASDAQ:SEED) is trading the closest to her theoretical low point. While this may suggests a turnaround is around the corner, this may not be the case right now. Origin Agritech (NASDAQ:SEED) fell -13.3% for last week following weak quarterly earnings. The stocks has been a on a slide for over a month but when fundamentals are missing, sustainable recovery is out of question. Don't expect SEED to do much good for a short term.
China Automotive Systems (NASDAQ:CAAS) has been an extremely volatile stock in the past - and thus an oversold position suggests a pop up is a real possibility.
HSBC Plc. (NYSE:HBC), a Hang Seng Index heavy weight, is oversold and offers bottom fishing opportunity. Large cap stocks don't get to be so oversold as HSBC Plc. (NYSE:HBC) is right now.
The same is true for Aluminum Corp. of China (NYSE:ACH). Stronger dollar hurts commodity prices and commodity stocks as a result, a case with ACH at the moment. But a 25% slide for the third largest aluminum maker of the world in a month is certainly an extreme. Bottom fishers should pay attention right now.
For the rest of the oversold list, see chart below.
Most oversold Chinese stocks
The overbought end of the China stock universe is missing action - except for Baidu.com (NASDAQ:BIDU). The company will report earnings on Tuesday - and investors seem to be on strong numbers. Given that Baidu.com (NASDAQ:BIDU) has been reporting above analysts' estimates in the past, chances are that BIDU will report another blockbuster quarter.
Baidu.com earnings: consensus vs. actual
WuXi Pharma (NYSE:WX) and Shanda Games (NASDAQ:GAME) have some momentum left from last week left, according to the overbought monitor below.
Most overbought Chinese stocks