March 19, 2010 (Chinavestor) Chinese stocks have been trading in a narrow range lately according to the overbought and oversold monitors. There is not a single technically overbought China stock at the moment- though certain stocks are worth paying attention to. There are two online gamers on the list; Perfect World (NASDAQ:PWRD) and NetEase.com Inc. (NASDAQ:NTES). Noah Education Holdings Ltd. (NYSE:NED) looks similar to PWRD is - none of them are overbought but the strong uptrend is caught. New Oriental Education & Tech. Group Inc. (NYSE:EDU) is gone from the list since yesterday after a -3.25% drop on Thursday.
Weekly Buy and Sell stock list with e-mail ALERT
If you like our Overbought/Oversold report, you will love this! We combine technicals with fundamentals and risk to come up with two set of stocks: BEST and TOAST. The first list you get is the best momentum stocks from the China stock universe. They tend to carry over momentum for the week. Then you will have the list of the most oversold stocks that tend to pop up. We publish this list every Friday at 3:30 before the market closes so you don't miss out on any gap up on Monday morning. Details at Premium Content page.
Zooming in on the online game sector, Perfect World (NASDAQ:PWRD) looks good from a technical point of view. The stock is just trading above her trading envelope and is far from theoretical highs. Another positive sign is that industry leader NetEase.com Inc. (NASDAQ:NTES) is also strong technically speaking, suggesting firm fundamentals are fueling the resurgence of the sector. China online game landscape as earnings roll in.
Shares of Noah Education Holdings (NYSE:NED) are catching up with that of China Digital TV Holding (NYSE:STV) and China Eastern Airline (NYSE:CEA). But none of these stocks have approached theoretical highs yet, suggesting more upside is possible.
Most overbought China stocks
There hasn't been much of a change on the oversold China stock list since yesterday. HQ Sustainable Maritime (AMEX:HQS), Fuqi International (NASDAQ:FUQI), Jinpan Int. (NASDAQ:JST), China TechFiath Wireless (NASDAQ:CNTF) and American Oriental Bio (NYSE:AOB) continue to dominate the landscape. All these stocks are oversold but their recovery depends on several factors. When earnings hurt a stock so bad, recovery is difficult. But we're less pessimistic in case of American Oriental Bio (NYSE:AOB) because earnings were not as horrible as the sudden price drop suggests. AOB down on earnings, outlook. FUQI International (NASDAQ:FUQI) fell apart on investigations into her earnings - but the restatement itself doesn't justify a -40% drop in share price. Don't panic FUQI investor!
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.