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Momentum China stocks to watch on June 15

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economy4 June 15, 2010 (Chinavestor) Chinese stocks have bottomed out as the oversold chart testifies. Upside seems limited for China Unicom (NYSE:CHU), New Oriental Education & Tech. Group Inc. (NYSE:EDU) and Synutra International, Inc. (NASDAQ:SYUT) on Tuesday. Stocks with sustainable momentum, at least for the short term, include Home Inns & Hotels Management (NASDAQ:HMIN), ATA Inc. (NASDAQ:ATAI), China Finance Online (NASDAQ:JRJC), Baidu.com (NASDAQ:BIDU), Ctrip.com (NASDAQ:CTRP), and Huaneng Power (NYSE:HNP).

 

Huaneng Power (NYSE:HNP), China's largest independent power generator, was the most oversold China ADR last week and we pointed out last Monday that "Huaneng Power (NYSE:HNP) is less oversold than last week but is definitely a stock value investors should pay attention to. The company reported a net income growth of over 40% last quarter, but warned of overcapacity related margin pressures ahead." China stocks to watch on June 7, Monday. The company bounced back off over 10% since June 7 with more upside potential.

China Unicom (NYSE:CHU) became overbought and is expected to take a breather on Tuesday.

New Oriental Education & Tech. Group Inc. (NYSE:EDU) hasn't reached theoretical highs yet but the sudden advance from $88.8 last Tuesday to $95.37 suggests profit taking will take its toll.

Synutra Int. (NASDAQ:SYUT) went from $17 to $24 in less than a week but succumbed to profit taking in the last two days. With strong earnings on its back, the uptrend might continue - albeit timing is difficult.

Baidu.com (NASDAQ:BIDU) is an explosive China play that may clear 3% a day easily, should market sentiment remain strong.

Home Inns & Hotels Management (NASDAQ:HMIN) is not overbought despite latest really... Value investors have been snapping up shares of the company following better-than-expected earnings.

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The oversold end of the China stock universe is missing action.  There aren't any oversold China stock at the moment, technically speaking. Most China ADRs have been trading in a narrow range suggesting they have bottomed out. Shanda Interactive (NASDAQ:SNDA) and Hurray! Holdings (NASDAQ:HRAY) are somewhat exception but with no indication of future price movements.

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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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