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Overbought stock watch list for Wednesday

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watch_4 April 7, 2010 (Chinavestor) Momentum is back for China stocks as is evidenced by large number of good size arrows on the overbought monitor below. China Information Security Tech, Inc.(NASDAQ:CPBY) is less overbought than Wonder Auto Technology (NASDAQ:WATG), despite a +30% vs. +13% jump yesterday. Downside risk exceed upside potential for China Telecom (NYSE:CHA) and China Petroleum & Chemical Corp. (NYSE:SNP), according to the overbought monitor.  Gushan Environmental Energy (NYSE:GU), a bio-diesel producer, has been benefiting from higher oil price yet is still trading within her trading range. This is the case with Chinese solar markets, LDK Solar (NYSE:LDK) and ReneSola (NYSE:SOL) - both companies have upside potential left. Despite a +$18.11 or +3.01% advance yesterday, shares of Baidu.com (NASDAQ:BIDU) are not overbought suggesting more advance in on the road ahead.

Stocks on the oversold end drawing attention include Perfect World (NASDAQ:PWRD) and Rino International (NASDAQ:RINO) besides technically oversold China GrenTech (NASDAQ:GRRF) and A-Power Energy Generation Systems (NASDAQ:APWR).

Back to the overbought screen: China Information Security Tech. (NASDAQ:CPBY) jumped +31.58% as the company got selected to play a major role in helping China to switch from "manual negotiation" to a digital grid, media reported. Given that shares of the company has been trading in a narrow range current 30% plus jump is certainly extraordinary. This qualifies for  a classical example of being overbought, however the rally may last for a couple of days according to the chart below.

Shares of Wonder Auto Technology (NASDAQ:WATG) jumped over +13% yesterday following upped revenue and net income growth for 2010 Q1. But the company became overbought, suggesting a technical pull back is highly likely.  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.

China Telecom (NYSE:CHA) has been leveling off limiting upside potential for the short run, yet remains trading close to theoretical highs.  Sinopec (NYSE:SNP) fell in Hong Kong on Wednesday as high oil price erodes refining margins, a bad omen for her NYSE listed ADRs.

High oil price is beneficial for bio-diesel producers like Gushan Environmental Energy (NYSE:GU). Shares of the company are trading within her trading range suggesting more upside is very possible. Chinese solar stocks enjoy high oil price as well and despite recent advances LDK Solar (NYSE:LDK) and ReneSola Ltd. (NYSE:SOL) have more upside left.

While Baidu.com (NASDAQ:BIDU) moved the most yesterday measured in dollar change, the $18.11 advance translates to only 3.01% - something that's not unusual for Baidu. The company didn't even make it to the overbought screen suggesting the stock looks good from a technical point of view.

Most overbought China stocks

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China Grentech (NASDAQ:GRRF) and A-Power Holdings (NASDAQ:APWR) continue to tower the oversold China stock list. Both are considered oversold but the turnaround may have to wait... Less "impressive" however unusual loss of momentum of Perfect World (NASDAQ:PWRD) and Rino International (NASDAQ:RINO) is worth paying attention. Both companies look much better from a fundamental point of view than current technicals suggest. Get ready for a possible bounce back.

Most oversold China stock list

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