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Momentum China stocks wish investors Happy New Year

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new_year1 Feb. 12, 2010 (Chinavestor) Momentum is back for Chinese stocks - as the overbought chart testifies. Most of the action is taking place on the overbought end of the China ADR universe. Stocks to watch today include Baidu.com (NASDAQ:BIDU), China Fire & Security Group (NASDAQ:CFSG), Guangshen Rail (NYSE:GSH), Huaneng Power (NYSE:HNP), JA Solar (NASDAQ:JASO) and the rest of the solar sector.

 

We featured Synutra International (NASDAQ:SYUT) and Jinpan International (NASDAQ:JST) on Thursday saying that these stocks have sustainable momentum. Jinpan continued to outperform but Synutra hit a resistance level at $14.25.

Baidu.com (NASDAQ:BIDU) is the most overbought China stock at the moment. It is important to keep in mind that overbought is not necessarily the same as being bearish. It merely infers that the security has risen too far too fast and may be due for a reaction pullback.

Shares of China Fire & Security Group (NASDAQ:CFSG) advanced 3.12% on Thursday. Despite strong gains in the week, the stock is not overbought - suggesting more upside is ahead.

Large cap Huaneng Power (NYSE:HNP) has advanced over 10% in the last five trading days, an unusual move for the company. Electricity generation was up 41% in January in China compared to a year ago as China's factories are in high gear. Despite current rally, shares of Huaneng Power (NYSE:HNP) are far from overbought.

Shares of JA Solar (NASDAQ:JASO) advanced 8.57% on Thursday following better-then-expected 2009 Q4 numbers. The rest of the sector is going to report later the month but JASO's strong outlook suggests more upside is on the road for solar plays.

Most overbought Chinese stocks

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There is not much action taking place by looking at the oversold end of the China stock universe this morning. eLong Inc. (NASDAQ:LONG) has been oversold for the longest time, making investors wondering where the bottom for the stock might be. LONG is going to report Q4 numbers on March 3, 2010 - don't expect much volatility before that day.

Most oversold China stocks

OS-2010212

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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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