Feb. 18, 2010 (Chinavestor) There has been a return of momentum into Chinese stocks this week - most of it being technically driven. China Precision Steel (NASDAQ:CPSL) reported earnings on Monday and jumped +21.1% this week - the best China ADR for the week so far. A-Power Energy Generation Systems (NASDAQ:APWR) is up +12.6% but is still in shambles compared to her price 3 months ago. Just as we said on Satruday, 3SBio (NASDAQ:SSRX) was trading at a discount and as a result edged up +11.0% since Monday. "A low key stock, 3SBio Inc. (NASDAQ:SSRX) reported descent fourth quarter earnings and guided 2010 revenues in-line with expectations, but looks to be trading at a discount at the moment." - we said on Saturday: China stock weekly roundup Feb. 8-12.
The overbought indicator picked up CNinsure Inc. (NASDAQ:CISG), a China stock that has been very strong lately. The good news is that the stock is not overbought as of yet - but it doesn't mean the price will keep going higher.
We're still of a view that sooner or later Baidu.com (NASDAQ:BIDU) is going to give the $500 level a run. With jobless numbers and PPI worse-than-expected, this run is not going to happen today. Nevertheless BIDU is a stock investors should not give up on.
Most overbought China stock list
The oversold end of the China stock universe has few stocks to consider. AirMedia Group (NASDAQ:AMCN) and Wonder Auto Technology are not oversold yet, suggesting more downside is within the cards. Yingly Solar (NYSE:YGE), Origin Agritech (NASDAQ:SEED), Asiainfo Holdings (NASDAQ:ASIA) and China TechFaith Wireless (NASDAQ:CNTF) are stock that have started to bottom out... yet when markets are heading south these stocks won't shine. Yet keep your eyes on these stocks - even might want to buy into weakness...
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.