December 23, 2010 (Chinavestor) When the DJIA is at 52 week highs, Chinese ADRs move accordingly. While the number of overbought Chinese stocks is zero, there are plenty of momentum stocks to watch. China Green Agriculture (NYSE:CGA) and China Yuchai International Limited (NYSE:CYD) have been champions lately but Giant Interactive (NYSE:GA), China Precision Steel (NASDAQ:CPSL) and China BAK Battery (NASDAQ:CBAK) are catching up fast. Petrochina Co. Ltd. (NYSE:PTR), China's largest oil company, is not as volatile as smaller counterparts but has upside for Thursday as well.
As always, devil is in the details. China-Biotics (NASDAQ:CHBT) is on the top of the overbought China stock list - but has lost momentum and is a big question mark right now.
China Green Agriculture (NYSE:CGA) continued to be a developing story with increasing downside risk. But just like China Yuchai International Limited (NYSE:CYD), none of these stocks have reached theoretical highs yet, suggesting more upside is possible albeit risk is on the rise!
The overbought monitor noticed the upswing of Giant Interactive (NYSE:GA), the only NYSE listed Chinese online game developer and operator.The stock jumped big on Tuesday at the end of the session and was able to hang on to most if the gains yesterday. Large underlying volume is another encouraging sign - something seasoned investors pay attention to.
China Precision Steel (NASDAQ:CPSL) looks good on the overbought monitor below but low volume renders the indicator unreliable.
China BAK Battery (NASDAQ:CBAK) is looking better at this point, despite 13% advance since last Thursday, more upside is possible.
There is not much change on the oversold monitor from yesterday. Telestone Technologies (NASDAQ:TSTC) remains oversold and may pop, but the stock has been oversold for over a week and thus is hard to tell what's going to happen. China Architectural Engineering, Inc. (NASDAQ:CAEI) went through a reverse stock split, goofing up the oversold chart. Investors should not pay attention to CAEI reading this morning.
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.