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Oversold China stock list to watch on Wednesday

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watch_out Feb. 10, 2010 (Chinavestor) Rescue plans for Greece spurred investor optimism globally, suggesting oversold China stocks will come handy on Wednesday. Oversold conditions can be classified by analyzing the chart pattern or with indicators such as the one below. 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. Combine this with a positive overall market sentiment and you got a list of stocks that are expected to outperform the day.

Baidu.com (NASDAQ:BIDU) is up 10% in pre-market trading but is due to a correction, according to the following article: Baidu soars after market, but ceiling is near. China Fire & Security Group (NASDAQ:CFSG) has shown sustainable momentum in the past and is set to do well on Wednesday, according to the overbought chart below.

eLong Inc. (NASDAQ:LONG), China Green Agriculture (NYSE:CGA) and Origin Agritech (NASDAQ:SEED) are on the top of the oversold list. But it doesn't mean these stocks are the best buy for Wednesday. When disappointing earnings are behind a weak market showing, as is the case with China Green Agriculture (NYSE:CGA), Nam Tai Electronics (NYSE:NTE), Chindex International (NASDAQ:CHDX) and Origin Agritech (NASDAQ:SEED), technicals are overturned by strong fundamental reasons. Don't expect these stocks to participate in today's rally.

Most oversold China stocks

OS-2010210

Looking at the other extreme of the Chinese stock list, China Fire & Security  Group (NASDAQ:CSFG) is the one with substantial momentum. The stock jumped 20% on Monday with heavy underlying volume, a very good sign. Despite a 20% advance in a matter of days, China Fire & Security Group (NASDAQ:CFSG) is not overbought! And just as importantly, the strong advance was due to an improved 2010 revenue outlook, a fundamental pillar that is there to last - at least up to the next quarter.

Most overbought China stocks

OB-2010210

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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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