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Steep fall takes toll on Chinese stocks, Nov. 17

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bear_bull November 17, 2010 (Chinavestor) Bears took the driver seat on Tuesday sending a large number of Chinese ADRs over the board. ReneSola Ltd. (NYSE:SOL), Solarfun Power Holdings (NASDAQ:SOLF) and Trina Solar (NYSE:TSL) fell the hardest among solar stocks. China Unicom (NYSE:CHU), E-House Holdings (NYSE:EJ) or GigaMedia (NASDAQ:GIGM) didn't please investors either.
The turnaround for oversold Rino International (NASDAQ:RINO) is still in the works but China Transinfo Technology Group (NASDAQ:CTFO) made a successful comeback on Tuesday.

There is not a single overbought Chinese ADR, technically speaking. City Telecom (NASDAQ:CTEL) was trading sideways on Tuesday while Simcere Pharma (NYSE:SCR) gave back over 6% of previous gains.

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Most of the actin took place on the oversold end of the China stock universe. ReneSola Ltd. (NYSE:SOL) fell 8.48% on Tuesday sending its shares way overboard. The stock reached theoretical lows suggesting ReneSola ltd. (NYSE:SOL) probably hit bottom. But when price of oil is falling along with the overall market, solar pays will find it difficult to find support.

This is very true for Trina Solar (NYSE:TSL) as well. The ADR fell 6.7% and is now considered oversold, but again a stock can't fight a market. Solarfun Power holdings (NASDAQ:SOLF) has been oversold for some time but with no support for the sector, upside is limited for the short run.

China Unicom (NYSE:CHU) is the weakest link among Chinese carriers after third quarter financials. Investors sold off this stock heaviliy in the past three days suggesting a bottom is near.

E-house Holdings (NYSE:EJ) has been picked up by the oversold monitor for quite some time but weak fundamentals, e.g. disappointing Q3 numbers, continue to hurt the stock. It will take time before E-House Holdings (NYSE:EJ) will find sufficient support.

GigaMedia Limited (NASDAQ:GIGM) is off 10% for the past few days but is trading well below its normal trading range. Current oversold reading suggests the stock may find some support at current prices soon.

Rino international (NASDAQ:RINO) fell again, extending the slide to the seventh day in a row. The stock is obviously oversold but is hammered under allegations and weak financial report. The stock is trading at extreme valuations as well, just 2.8 times earnings! A huge rally is a real possibility should market sentiment improve.

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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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