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China stocks watch list for April 12, 2010

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watch_4 April 12, 2010 (Chinavestor) While the number of overbought China stocks is on the rise the market itself isn't overbought, suggesting the party ain't over yet. Surprise: China Mobile (NYSE:CHL) advanced +7.3% in the last two weeks and became overbought. Giant Interactive (NYSE:GA), a stock trading in a narrow range for most of the time, advanced +5.6% last week and is in the danger zone. The overbought indicator caught a bullish uptrend for Longtop Financial Technologies (NYSE:LFT), Aluminum Corp. of China (NYSE:ACH), AgFeed Industries, Inc. (NASDAQ:FEED) and Qiao Xing Mobile Communication Co., Ltd (QXM). Stocks on the oversold end to watch out for include China Techfaith Wireless Comm. Tech. (NASDAQ:CNTF) and General Steel Holdings, Inc. (NYSE:GSI).

Details: Chinese telecoms have caught fire lately - as is evidenced on the overbought chart below. All three major carriers, China Mobile (NYSE:CHL), China Telecom (NYSE:CHA) and China Unicom (NYSE:CHU), made it to the best momentum China stock list on Monday. Chinese telecoms catch fire in April.

But China Mobile (NYSE:CHL) became overbought, suggesting a technical correction is likely to come. H-shares of China Telecom advanced in Hong Kong Monday morning, despite a negative market sentiment. But institutions have been shorting China Telecom lately , suggesting the time has come for China Mobile and China Unicom to catch up with CHA.

Shares of Giant Interactive (NYSE:GA), the only NYSE listed Chinese online game developer and operator, advanced +3.2% last Friday and became overbought. The stock price has been on a steady rise since March 22, advancing +8.6%. Time has come to take profits, according to the overbought chart below.

Longtop Financial Technologies (NYSE:LFT) has performed a V-shaped recovery but isn't overbought yet. With a strong market on its back LFT has more upside left, according to the chart below.

Shares of Aluminum Corp. of China (NYSE:ACH) and Qiao Xing Mobile Communication Co., Ltd (QXM) look almost identical from an overbought of view. Asian listed shares of Aluminum Corp. of China (NYSE:ACH) outperformed both in Hong Kong and Shanghai on Monday, suggesting more advance in on the way for her NYSE listed ADRs.

AgFeed Industries, Inc. (NASDAQ:FEED) was trading sideways earlier last week but accelerated on Thursday and Friday. Despite a +5.8% advance last week, shares of the company are not overbought - actually are trading still within the trading envelope. More upside is likely to follow...

Most overbought China stocks

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There hasn't been much action on the oversold end of the China stock universe China Techfaith Wireless Comm. Tech. (NASDAQ:CNTF) has been on the slide for too long - suggesting a turnaround is on the corner.

Another stock of interest is General Steel Holdings, Inc. (NYSE:GSI). The stock fell hard on March 15 following worse-than-expected financial results but recovered most of those losses the following two weeks - just to see all those gains to evaporate again.

Jinpan International (NASDAQ:JST) has been trading in a narrow range - no indication where it is going to move next.

3SBio (NASDAQ:SSSRX) isn't technically oversold despite heavy losses - more downside is possible.

Most oversold China stocks

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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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