June 8, 2010 (Chinavestor) Chinese ADRs have suffered a significant loss of momentum in the last five trading sessions. There are no overbought China plays as a result, only stocks with some momentum that lifts them above the crowd. China Finance Online (NASDAQ:JRJC), China Medical Technologies (NASDAQ:CMED), 51job Inc. (NASDAQ:JOBS), and China-Biotics Inc. (NASDAQ:CHBT).
These oversold China plays are waiting for a strong market day and are expected to react vividly. China Transinfo Technologies (NASDAQ:CTFO) reported a record 2010 Q1 on May 13 yet it failed to achieve much stock price appreciation. Actually the stock price is down 28.3% since delivering an outstanding first quarter.
Yanzhou Coal (NYSE:YZC), China's third largest coal miner, fell close to the lowest levels in 2010 due to weakness in energy -oil - prices. Yanzhou H-shares in Hong Kong (HKG:1171) were trading sideways earlier on Tuesday, setting no direction for its ADRs on the NYSE for today. While it may not be Tuesday that YZC will roar, that day is coming. Investors, watch out for YZC!
The three China ADRs trading the closes to their theoretical lows are JA Solar (NASDAQ:JASO), City Telecom (NASDAQ:CTEL) and Synutra International (NASDAQ:SYUT). JA Solar (NASDAQ:JASO) is oversold but so is the rest of the solar sector. Despite outstanding first quarter financials, solar stocks fell on lower oil/energy prices and the weaker euro. Yet value investors should pay attention to the sector!
The overbought end of the China ADR universe is much less active. Stocks like China Finance Online (NASDAQ:JRJC) and China Medical Technologies (NASDAQ:CMED) are not overbought at all. These stocks have just been catching up with previous median prices by making it back into the trading envelope.
51job Inc. (NASDAQ:JOBS) has just been cruising along yet it lifted it above the crowd.
China-Biotics Inc. (NASDAQ:CHBT) advanced 2.07% on Monday ahead of earnings release later the week. Yet it is in no way an indication about future price movements for the short term or long. Earnings will set a direction - but that have to wait until June 11, before the open.
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.