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China stock watch list for June 2, 2010

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watch_5 June 2, 2010 (Chinavestor) eLong Inc. (NASDAQ:LONG) became overbought after a 19.37% advance on Tuesday. But there is room for additional upside for Home Inns & Hotels Management (NASDAQ:HMIN), Baidu.com (NASDAQ:BIDU), Vimicro International (NASDAQ:VIMC), Hurray! Holding (NASDAQ:HRAY), and Cogo Group (NASDAQ:COGO). WSP Holdings Limited (NYSE:WH) had a dead cat bounce on Tuesday but its upside is limited. JA Solar (NASDAQ:JASO) is oversold and might pop any minute, according to the oversold chart.

Shares of eLong Inc. (NASDAQ:LONG) advanced just shy of 20% on Tuesday, a highly unusual move for the company. The stock is now overbought, not surprisingly. A short term technical correction is imminent.

Shares of Home Inns & Hotels Management (NASDAQ:HMIN) rose five days in a row - but there is more room left to the upside, according to the overbought chart below. Despite all the advances the stock hasn't reached theoretical highs yet.

Shares of Baidu.com (NASDAQ:BIDU), the largest Chinese ADR listed on the NASDAQ, rose 3.82% in the last five trading days and more upside is coming, according to the chart below.

Vimicro International (NASDAQ:VIMC) is similar to Baidu.com (NASDAQ:BIDU) from an overbought point of view. While the ride has been more erratic for VIMC, risky investors might reap from such a volatile stock. Timing will be key tough.

Hurray! Holding (NASDAQ:HRAY) advanced over 13% on Tuesday before releasing preliminary 2010 Q1 numbers. Despite all the advance the stock has more room left to the upside, according to the overbought chart below.

Shares of Cogo Group (NASDAQ:COGO) rose +3.4% on Tuesday and remained resilient to late afternoon sell-off; suggesting more upside is on the way.

While the overbought monitor picked up the uptick of WSP Holdings (NYSE:WH), it is important to remember that WH became oversold after a disastrous 2010 Q1 financial report. With that in mind, it is apparent that Tuesday's 12.6% jump was a technical correction but that won't last long unless the company starts delivering profits.

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Huaneng Power (NYSE:HNP) remains oversold and is a value buy based on technical and fundamentals! Chinese solar stocks remain under pressure as the euro keeps falling to fresh four year lows. But solar companies have reported robust 2010 Q1 and the industry looks trading at a significant discount at the moment. Expect volatility to remain high for solar plays for the next couple of weeks.

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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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