April 27, 2010 (Chinavestor) While the overbought screen is full of activity the oversold end of the China stock universe is relatively boring. WuXi Pharmatech (NYSE:WX), 51job Inc. (NAASDAQ:JOBS) and Global Sources (NASDAQ:GSOL) are technically overbought - and thus are in danger. Shares of Cogo Group (NASDAQ:COGO) and AsiaInfo Holdings (NASDAQ:ASIA), and Silvercop Metals (NYSE:SVM) are susceptible to a pull-back as well.
Back to the overbought screen. WuXi Pharmatech (NYSE:WX) are overbought but the share price won't collapse because of underlying fundamentals. Charles River Labs (NYSE:CRL) made an offer to acquire WuXi for $21.25/ADR, suggesting the stock price is there to stay, at the minimum.
51job Inc. (NASDAQ:JOBS) has advanced 20% in the last two days and became overbought. The company is going to report 2010 Q1 financials on May 6 after the close, suggesting current bump up in share price is due to investors' exuberance.
Shares of Global Sources Inc. (NASDAQ:GSOL) advanced five days in a row after hitting a temporary bottom on April 19. But the stock is now overbought and is trading at a record high for 2010 - suggesting the time has come to take a breather.
Shares of AsiaInfo Holdings (NASDAQ:ASIA) and Cogo Group (NASDAQ:COGO) aren't technically overbought yet but are vulnerable. Both securities have been trading above their trading envelope for over a week, suggesting profit taking is now a real possibility.
Silvercop Metals (NYSE:SVM) looks very similar to ASIA or COGO - though the rally has been less dramatic. This in turn suggests downside risk is lower for the company.
Most overbought China stocks
There aren't any oversold stock technically speaking, but Canadian Solar (NASADAQ:CSIQ). Yet the turn around may have to wait, today's market is not going to favor solar makers. China BAK Battery (NASDAQ:CBAK) has been on the soft side lately - but earning released last night suggest more downside is on the road. Our assessment of the situation this morning was that "The company reported dismal revenue growth while staying in the red for the quarter. Additionally, CBAK lowered FY 2010 guidance, suggesting the turnaround is not in the corner." Property market, Greece send China stocks to six months low.
Despite a disappointing performance, more downside is likely to come for Chinese real estate companies. Shares of China Real Estate Information Corporation (NASDAQ:CRIC) and China Housing & Land Development, Inc. (NASDAQ:CHLN) are not oversold yet, according to the chart below. Construction material and commodity stocks fell earlier in Asia, suggesting General Steel (NYSE:GSI) remain under pressure for Tuesday, too.
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.