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Oversold China plays for bargain hunters

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watch_5 May 21, 2010 (Chinavestor) It's getting harder to distinguish between oversold China stocks as the list gets bigger by the day. Chinese ADRs that are the most likely to bounce back up once the sell-off ends include: Petrochina Co. Ltd. (NYSE:PTR), China Automotive Systems (NASDAQ:CAAS), Yanzhou Coal (NYSE:YZC), eLong Inc. (NASDAQ:LONG), China Eastern Airlines (NYSE:CEA),  Focus Media Holdings (NASDAQ:FMCN) and Aluminum Corp. of China (NYSE:ACH).

The overbought list of China stocks is bare: even a 21% jump in China TechFaith Wireless (NASDAQ:CNTF) is hardly noticeable...

Chinese solar stocks are going to continue to report earnings the upcoming week with industry leader Trina Solar (NYSE:TSL) is focus. So far each and every Chinese solar company beat estimates that reported 2010 Q1 numbers. Chances are that TSL and the rest of the solar sector will do well next week.

Large cap China ADRs don't often get oversold to a point where Petrochina (NYSE:PTR) or Aluminum Corp. of China (NYSE:ACH) is.  Chinese airliners have been volatile just as Yanzhou Coal (NYSE:YZC) but again, China Eastern Airlines (NYSE:CEA) is trading at a discount, according to the oversold chart.

China Automotive Systems (NASDAQ:CAAS) has been very volatile, a good trading stock... may be up to a nice rally...

eLong Inc. (NASDAQA:LONG) is not only oversold but reported better-than-expected, suggesting a nice surprise is on the way, similar to China TechFiath Wireless (NASDAQ:CNTF), an oversold stock that advanced over 20% yesterday. China TechFaith Wireless Q1 profit rises.

Another small cap, volatile China ADR that might pop is Focus Media Holdings (NASDAQ:FMCN), according to the chart below.

OS_2010521

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

OB_2010521

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.

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