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Not that many China stock extremes, Dec. 16

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banace_4 December 16, 2010 (Chinavestor) The number of Chinese stocks trading at extremes is on the decline from earlier the week. There is not a single China stock overbought to the extremes and only three are trading next to theoretical lows on the oversold screen. This suggests the usefulness of the overbought and oversold indicator this morning is limited. Yet there are some developing stories that are worth paying attention to. China Biotics (NASDAQ:CHBT), Cogo Group Inc. (NASDAQ:COGO) and Advanced Battery Technologies, Inc. (NASDAQ:ABAT) are stocks with momentum, something that comes handy when markets heads north.

News stocks of interest on the ovetsold screen include ShengdaTech Inc. (NASDAQ:SDTH), Longtop Financial Technologies Limited (NASDAQ:LFT), China Mobile (NYSE:CHL) and Shanda Interactive (NASDAQ:SNDA).

Back to the overbought screen. China Biotics (NASDAQ:CHBT) is the most overbought China ADR at the moment yet the company is not overbought to the extremes. This suggests more upside is possible for the stock.

Cogo Group Inc. (NASDAQ:COGO) is a developing story along with Advanced Battery Technologies, Inc. (NASDAQ:ABAT). Both stocks are up significantly over the week but have more upside left, should market sentiment remain strong.

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Telestone Technologies (NASDAQ:TSTC) has been trading in a narrow range lately but is oversold, suggesting chances are that the stock will go higher.

ShengdaTech Inc. (NASDAQ:SDTH) fell over 20% since last Thursday and is oversold. Downside risk now looks limited as the stock approached theoretical lows.

Longtop Financial Technologies Limited (NASDAQ:LFT) is off big time for the week sending current stock price way below normal trading range. But investors have to exercise caution because more downside is possible.

China Mobile (NYSE:CHL) is a lrge cap stock that usually don't get oversold to the extrmes. Based on its H-shares in Hong Kong earelir this morning, China Mobile (NYSE:CHL) has a chance to inch higher on Thursday.

Shanda Interactive (NASDAQ:SNDA) is new on the oversold screen though is not trading at extremes yet. Investors may want to consider buying quality internet stocks on the cheap.

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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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