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China stocks on the radar screen for September 2

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eye September 2, 2010 (Chinavestor) A relatively small chance in the price of Huaneng Power (NYSE:HNP) sent its stock over the board, according to the overbought monitor. Acorn International (NYSE:ATV) is another China stock in the danger zone. Despite a recent surge, Trina Solar (NYSE:TSL) and China Unicom (NYSE:CHU) are looking good from a technical point of view. China Medical Technology (NASDAQ:CMED) hasn't reached theoretical highs yet, suggesting more upside is possible. Home Inns & Hotels Management (NASDAQ:HMIN) and China Telecom (NYSE:CHA) are looking good as long as market sentiment remains robust.

Large cap NYSE listed China stocks, such as Huaneng Power (NYSE:HNP), don't usually get overbought all the way to reach theoretical highs. Current reading on the overbought screen suggests the stock is going to take a break before deciding where to go from here.

Although Acorn International (NYSE:ATV) hasn't cleared as much ground as HNP and hasn't reached theoretical highs yet, current stock price looks to be a stretch, according to the chart below.

Trina Solar (NYSE:TSL) is one solar stock on fire with a positive short term outlook - assuming energy prices will keep rising. High oil is good for solar stocks, Trina Solar (NYSE:TSL) included. The stock is far from TeHi point, a good sign for technical analysts.

China Unicom (NYSE:CHU), China's second largest mobile carrier, is similar to Trina Solar (NYSE:TSL) from a technical point of view. There is more upside left for the stock based on the overbought chart below.

While China Medical Technology (NASDAQ:CMED) is the third from the top of the overbought chart, upside is possible for this company based on technicals. The stock just barely rose above its trading envelope while not reaching theoretical highs yet.

There are a number of vulnerable stocks on the overbought screen: Home Inns & Hotels Management (NASDAQ:HMIN) being one of them. The stock has more upside, given her current stock price is far from theoretical highs. But the pace of advance gives a reason for concern should market sentiment turn negative. The same is true for China Telecom (NYSE:CHA), as both stock look very similar on the overbought screen below.

OB_201092

After a strong market day, like the one on Wednesday when the DJIA advanced over 250 points, the oversold screen is less intense. KongZhong Corp. (NASDAQ:KONG) sticks out but this is it for the indicator for the day.

OS_201092

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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