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China stocks can't fight the market on June 24

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clock_1 June 24, 2010 (Chinavestor) There isn't any overbought China stock that the moment. China Unicom (NYSE:CHU) took the lead again after 51job Inc. (NASDAQ:JOBS) fell 2.8 percent on Wednesday. Sinopec Shanghai Petrochemical (NYSE:SHI) has been one of the strongest China stocks lately along with Huaneng Power Int. (NYSE:HNP). Ctrip.com (NASDAQ:CTRP) and Home Inns & Hotels Management (NASDAQ:HMIN) have been leveling off while Baidu.com (NASDAQ:BIDU) has more upside left.

WuXi Pharma Tech (NYSE:WX) remains the most oversold China play with JA Solar (NASDAQ:JASO) added to the mix. China Fire & Security Group (NASDAQ:CFSG) fell six days in a row but more downside is possible according to the oversold chart.


But investors have to remember that Chinese stocks are subject to overall market sentiment and Ctrip.com International (NASDAQ:CTRP) or Baidu.com (NASDAQ:BIDU) can't fight the market. Home Inns & Hotels Management (NASDAQ:HMIN) has been one of the best performing NASDAQ listed China stock lately but is trading at 52 week highs at a time when market momentum is absent...

Huaneng Power (NYSE:HNP) and Sinopec Shanghai Petrochemical (NYSE:SHI) are two large, state owned Chinese companies that advanced on strong fundamentals. Huaneng Power Int. (NYSE:HNP) reported over 30 percent increase in power production for May compared to last year, defying analysts who cautioned about deteriorating generation rate due to overcapacity. Sinopec Shanghai Petrochemical (NYSE:SHI) is enjoying margin increases in its plastic and resign segments due to lower price for naphtha and strong secondary prices. Both stocks look good from a technical point of view with more upside left, according to the overbought chart below.

OB_2010624

Wu Xi Pharma Tech (NYSE:WX) is NOT oversold technically speaking but is the most oversold China play at the moment. JA solar Holdings (NASDAQ:JASO) is just as close to the theoretical lows as China Fire & Security Group (NASDAQ:CFSG) and Linktone Ltd. (NASDAQ:LTON), but that doesn't mean the turnaround was in the corner.

OS_2010624

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.

aexpl-obos



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