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Oversold solars and telcos are ready to shine, Dec. 1

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bear_bull December 1, 2010 (Chinavestor) It's hard to find a China stock with momentum at the end of November. Nevertheless Simcere Pharmaceutical (NYSE:SCR) continued to shine on Tuesday. Other China stocks with some noticeable momentum include Actions Semiconductor Co., Ltd. (NASDAQ:ACTS) and Sina Corp. (NASDAQ:SINA).

Chinese solar stocks continue to suffer; JA Solar Holdings (NASDAQ:JASO) and ReneSola ltd. (NYSE:SOL) are oversold and ready for a comeback. Trina Solar (NSE:TSL) fell despite a strong quarterly report and is about to bottom out, according to the oversold chart below. The sudden drop of Vimicro International Corporation (NASDAQ:VIMC) didn't go unnoticed while prominent telcos like China Telecom (NYSE:CHA) and China Mobile (NYSE:CHL) continue to lack momentum.

Back to the overbought monitor. Despite the significant jump, shares of Simcere Pharmaceutical (NYSE:SCR) are not overbought yet.  Sina Corp. (NASDAQ:SINA) gave back some of its gains from Monday but remains one of those few China ADRs that look good on the overbought screen.

OB_2010121

Chinese solar stocks are oversold, according to the monitor below. JA Solar Holdings (NASDAQ:JASO) has reached theoretical lows and is ready to bottom out. ReneSola ltd. (NYSE:SOL) is almost as oversold and the large number of Chinese solar plays on the screen suggests the sector is suffering as a whole. Trina Solar (NYSE:TSL) reported sound financials yet fell hard for the day. Solarfun Power Holdings (NASDAQ:SOLF) and Canadian Solar (NASDAQ:CSIQ) are all oversold to a different degree

Vimicro International Corporation (NASDAQ:VIMC) fell 7.04% on disappointing financials on Tuesday. But despite a sizable fall, more downside is possible based on the oversold chart below.

Another oversold sector is the Chinese telecommunications sector. China Telecom (NYSE:CHA) is the closest to theoretical lows but outlook is just as promising for China Mobile (NYSE:CHL).

OS_2010121

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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