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Oversold stocks bounce back on Monday

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money_4 May 3, 2010 (Chinavestor) While the overbought monitor is less dramatic, the oversold indicator makes up for it. ChinaCast Education (NASDAQ:CAST), Noah Education Holdings (NYSE:NED), Guangshen Rail (NYSE:GSH), China Digital TV Holding (NYSE:STV), Sohu.com (NASDAQ:SOHU) and Simcere Pharmaceutical Group (NYSE:SCR) are stock to watch out in the oversold monitor this morning. Strong earnings from China Sunergy (NASDAQ:CSUN) propelled the stock to the top of the overbought chart, followed by Yanzhou Coal (NYSE:YZC) and China Unicom (NYSE:CHU). Despite a $85 jump last Thursday, shares of Baidu.com (NASDAQ:BIDU) are not in the danger zone.

Education stocks suffered a heavy blow last week both in the U.S. and in China. But ChinaCast Education (NASDAQ:CAST) as well as Noah Education Holdings (NYSE:NED) became oversold, suggesting a bottom is near and even better, a bounce back up is a real possibility.

Credit Suisse bought 25 million H-shares of Guangshen Rail (HGK:0525) last week - supposedly at the bottom. Shares of the company are oversold suggesting Credit Suisse bought this stock at a discount.

Shares of China Digital TV Holding (NYSE:STV) fell four days in a row and the stock looks oversold at the moment. 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.

Sohu.com (NASDAQ:SOHU) reported earnings that failed to impress investors. Yet the technical indicator suggests better time are ahead for this internet stock. Internet ad stocks up after SOHU bullish outlook.

Shares of Simcere Pharmaceutical Group (NYSE:SCR) have experience three days of volatile trading at the end of last week. The oversold indicator suggests the stock may break up and head back north should overall market condition remain favorable.

Most oversold China stock list

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Solar stocks caught fire last week thanks to strong numbers from China Sunergy (NASDAQ:CSUN). CSUN 2010 Q1 back to profit. The company reported record PV shipments, strong revenue and earnings growth.

Yanzhou Coal (NYSE:YZC) has been stretching it too far, according to the overbought monitor below. Hong Kong listed H-shares of the company fell as much as -6.3% earlier today, suggesting a similar bearish performance ahead of the NYSE trading on Monday.

China Unicom (NYSE:CHU) is trading above her trading envelope, a vulnerable position when the telecom sector is under pressure. Lackluster growth from CHU and CHA contributed to a major sector wide sell-off last week. Investors will have to exercise caution with the sector for the short term.

Baidu.com (NASDAQ:BISU) reported strong revenue and earnings growth plus guided 2010 Q2 revenues way above consensus estimates last Thursday. The reaction of investors was explosive sending the shares over $700 for the first time. Despite the 10% jump, shares of the company are not overbought. Baidu: Is the $90 jump out of sync?

Most overbought China stocks list

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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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