November 30, 2010 (Chinavestor) Selected Chinese ADRs got their mojo back thanks to a firm finish of the Dow Jones Industrial Average (INDEXDJX:.DJI). A few larger trades were enough to move low volume Actions Semiconductor Co., Ltd. (NASDAQ:ACTS) substantially higher but the rally of Simcere Pharmaceutical Group (NYSE:SCR) looked more convincing. Sina Corp. (NASDAQ:SINA) took advantage of the late rally while a modest pullback kept Synutra International, Inc. (NASDAQ:SYUT) close to theoretical highs. Momentum halted for Global Sources Ltd. (NASDAQ:GSOL) as well on Monday.
Looking at the most overbought China stock list this morning, Actions Semiconductor Co., Ltd. (NASDAQ:ACTS) took the lead. But investors have to keep in mind that this ADR has a very low volume and a few large trades can move the stock widely. This is why it's hard to say if current strength is part of a trend or just a wild shot.
Simcere Pharmaceutical Group (NYSE:SCR) advanced almost 10% on Monday, part of a longer-term rally. Despite recent run-up, more upside is possible for the stock, according to the overbought chart below.
Sina Corp. (NASDAQ:SINA) rose over 5% to 52 weeks high as the Dow Jones Industrial Average (INDEXDJX:.DJI) firmed up. The stock has more upside left according to the overbought monitor below.
Synutra International, Inc. (NASDAQ:SYUT) actually fell - just as was predicted by the overbought monitor a day before. The stock may resume its rally from now on, asuming it took the necessary breather on Monday.
Momentum dried up for Global Sources Ltd. (NASDAQ:GSOL) on Monday. The stock is trading at 52 week highs as well thanks to sound fundamentals. More upside is possible, according to the chart below.
Looking at the oversold end of the China stock universe, the first observation is that there isn't much change from yesterday. Rene Sola Ltd. (NYSE:SOL) remains the most oversold China stock. but the bottom is near for this solar play, as the following chart testifies. Another oversold PV maker is JA Solar Holdings (NASDAQ:JASO) and again, the bottom is near here as well. Chinese telecoms continue to suffer with China Mobile (NYSE:CHL) being the most oversold from China's telecom triumvirate. But we're of a view that these stocks offer bottom fishing opportunities for the value buyer. China Mobile (NYSE:CHL) under $50 is a bargain.
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.