A stock in the danger zone to watch out is Synutra International (NASDAQ:SYUT), a stock that's way above her trading envelope. We highlighted China Digital TV Holdings (NYSE:STV) as an overbought stock earlier this week and has been leveling off since then. Synutra Int. (NASDAQ:SYUT) looks similar to China Digital three days ago from a technical point of view.
The advance of China Telecom (NYSE:CHA) might look small when measured in percentage points but in terms of stocks characteristics a +6.6% advance for this sleepy stock is remarkable. Deutsche Bank upgraded China Telecom (NYSE:CHA) and China Unicom (NYSE:CHU) igniting the rally, but investors have to be careful with these stocks from now on. NYSE listed large cap China stocks don't get to touch the theoretical highs before they get overbought. CHA looks similar to China Eastern Airlines (NYSE:CEA), a stock that advanced 10% last week thanks to a five days winning streak - and then have fallen four consecutive days in Hong Kong, including this very morning. Again, China Telecom (NYSE:CHA) looks overbought and might take a breather.
Mindray Medical (NYSE:MR) is a stock we like based on fundamentals. "The company reported solid revenue and earnings growth and issued a conservative revenue guidance. Yet the company actually fell in the after-market trading. It looks to me that some investors don't get the big picture." we wrote on Tuesday in the Mindray trading at a discount - 2009 Q4 reflections article. But the markets quickly corrected the first reading of the results and after a significant gap down in the morning the stock actually ended the day in the black. The stock is not overbought yet and has more upside - according to the chart below.
Mindray Medical (NYSE:MR) looks similar to Melco Crown Entertainment (NASDAQ:MPEL) and Vanceinfo Tech (NYSE:VIT) from a technical point of view. Despite significant stock price appreciation lately there is room for additional upside.
Shares of Baidu.com (NASDAQ:BIDU) have been trading in a narrow range lately. The stock got a UBS downgrade on valuation but it haven't budget. We're of a view that the stock lost catalyst after reaching the $500 mark last month and will have hard time to go higher. This is why we suggested to Chinavestor premium members to sell BIDU at $513 at the end of the month. Not that BIDU is no good anymore but rather short term upside became limited after a 22% run in February. Based on the chart below, BIDU can go to either direction - but we're of a view that a pullback is more likely for the next few weeks.
Most overbought China stocks list
The oversold end of the China stock universe was predictable yesterday. We told you that Chinese online game stocks became oversold and are ready for a comeback. Considering that Shanda Games (NASDAQ:GAME) advanced +6.48% followed by Perfect World (NASDAQ:PWRD) +1.94% the question is when Shanda Interactive (NASDAQ:SNDA) and Changyou.com (NASDAQ:CYOU) will start catching up with the rest of the sector.
The dramatic fall of VisionChina Media (NASDAQ:VISN) is caught by the oversold monitor - but a bounce back is going to be a dead cat bounce rather than a sustainable recovery. Read Earnings update: VISN goes bust...
Most oversold China 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.