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Overbought China stocks to watch early January

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telescope1 January 12, 2011 (Chinavestor) Momentum is back for Chinese stocks, according to the overbought monitor today. China Telecom (NYSE:CHA), 51job Inc. (NASDAQ:JOBS) and Harbin Electric, Inc. (NASDAQ:HRBN) portray the most unusual move but Sina Corp. (NASDAQ:SINA), China Housing & Land Development, Inc. (NASDAQ:CHLN) and Trina Solar (NYSE:TSL) are also stocks on the roll.

The good news is that China Telecom (NYSE:CHA) was the best performing NYSE cross-listed component of the Hang Seng Index (INDEXHANGSENG:.HSI) this morning, suggesting the rally is about to continue into Wednesday. Today may be a perfect portif taking opportunity, according to the overbought chart below.

China Housing & Land Development, Inc. (NASDAQ:CHLN) has sustained fundamentals support. Property stocks shined in Shanghai on Wednesday, highlighting the paramount buying interest that's been behind the sector in January.

But downside risk exceeds upside potential for 51job Inc. (NASDAQ:JOBS) and Harbin Electric, Inc. (NASDAQ:HRBN)- something investrors should pay attention to.

Sina Corp. (NASDAQ:SINA) and Trina Solar (NYSE:TSL) boost sustainable momentum at this point, according to the overbought chart below.

OB_2011112

There is no China ADR trading at an oversold extreme at the moment. Stocks with significant momentum include Advanced Battery (NASDAQ:ABAT) and KongZhong Corp. (NASDAQ:KONG).

OS_2011112

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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