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China momentum stocks on January 11

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advance9 January 11, 2011 (Chinavestor) Interesting stocks from the overbought monitor this morning include  Melco Crown Entertainment (NASDAQ:MPEL), 51job Inc. (NASDAQ:JOBS), Trina Solar (NYSE:TSL), and UTStarcom Inc. (NASDAQ:UTSI). Advanced Battery Technologies, Inc. (NASDAQ:ABAT), China Green Agriculture (NYSE:CGA) are developing stories on the oversold monitor while weakness of New Oriental Education & Tech. Group Inc (NYSE:EDU) bodes ill for the sector.

Melco Crown Entertainment (NASDAQ:MPEL) is the closest to theoretical highs yet the pace of advance has significantly slowed down lately. This in turn suggests the rally may continue well into Wednesday.

51job Inc. (NASDAQ:JOBS) is more vulnerable to a correction though as the following chart testifies. The stock advanced over 7% on Monday and may have to slow down before resuming the rally.

UTStarcom Inc. (NASDAQ:UTSI) is clearly on the roll but lower volume suggests the rally is loosing support.

Trina Solar (NYSE:TSL), a leading solar panel maker, is showing sustainable momentum, at least for the short run. With oil prices up in the $90s, fundamentals are in place for the industry. The other positive development for TSL is that despite recent gains, the stock is far from overbought.

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Advanced Battery Technologies, Inc. (NASDAQ:ABAT) is one of the most oversold China stock this morning. The stock is trading well below its normal trading range right now though hasn't reached theoretical lows yet. More downside is possible albeit at a slower pace.

China Green Agriculture (NYSE:CGA) seems to have bottomed out at arounfd $7.50. That's right at the lower end of her trading envelope. Technical indicators don't indicate where the stock is going to go from here.

New Oriental Education & Tech. Group Inc (NYSE:EDU), the largest such stock from the industry, is among the 20 most oversold Chinese stocks. While the ADR is clearly not oversold, its presence on the chart is just a bad indicator for the industry. Experience has thoughts us that when market leaders fall, smaller players follow. Investors better be careful with Chinacast Education Corporation (NASDAZQ:CAST), ChinaEdu Corporation (NASDAQ:CEDU) or China Education Alliance, Inc.(NYSE:CEU).

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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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