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China stock extremes on September 17

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red_flag September 17, 2010 (Chinavestor) Two Chinese stocks are overbought to the extreme according to the chart below: Sina Corporation (NASDAQ:SINA) for one and Huaneng Power International (NYSE:HNP) for two. Wonder Auto Technology (NASDAQ:WATG) and New Oriental Education (NYSE:EDU) are new stocks on the overbought screen along with Melco Crown Entertainment (NASDAQ:MPEL).

Sina Corp. (NASDAQ:SINA) cleared $4.39 or 9.56 percent just in one day as investors flee small cap stocks and found safety in larger names. Sohu.com (NASDAQ:SHU), another household name from the Chinese internet stock universe, is on the roll.

Huaneng Power Int. (NYSE:HNP) is China's largest independent power generator that rallied in Hong Kong and on the NYSE after a Citi report suggesting rate increase is on the way in October. "... power companies surged after a Citi report suggested tariffs are going to start increasing by RMB15-25 per MWh in October. The reports was based on a meeting between the country's top economic planner and representatives of power companies. HKEx-NYSE cross listed Huaneng Power (HKG:0902) (NYSE:HNP) jumped 3.9 percent on the news." China stocks slip in Asia on September 16.

Wonder Auto Technologies (NASDAQ:WATG) is up ten percent since last Thursday and may explode... Despite latest surge the stock hasn't reached it theoretical highs.

New Oriental Education (NYSE:EDU) is similar to Wonder Auto Technologies (NASDAQ:WATG) from a technical point of view. Both stocks stepped out of their trading range but have more upside potential left, according to the overbought monitor below.

Melco Crown Entertainment (NASDAQ:MPEL) is an explosive stock that can rock the boat. Despite latest show of strenght, the rally has more room to go... according to the chat below.

OB_2010917

China Integrated Energy (NASDAQ:CBEH) is nearing the bottom, as the oversold chart testifies. But despite significant losses, Actions Semiconductor (NASDAQ:ACTS) is not out of the woods yet...

OS_2010917

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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