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CHA and other overbought China stocks

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thumb_down1 January 13, 2011 (Chinavestor) China Telecom (NYSE:CHA) is clearly overbought but isn't the only stock in the danger zone for today. Melco Crown Entertainment (NASDAQ:MPEL), Harbin Electric, Inc. (NASDAQ:HRBN) and 51job Inc. (NASDAQ:JOBS) are all stretching too thin. However Suntech Power (NYSE:STP) and Petrochinha Co. Ltd. (NYSE:PTR) have more sustainable momentum, according to the overbought chart below.

China Telecom (NYSE:CHA) is looking very similar to 51job Inc. (NASDAQ:JOBS) or Melco Crown Entertainment (NASDAQ:MPEL) earlier the week. Both stocks have slowed down and this is the time for the Chinese telecom giant to do the same.

Harbin Electric (NASDAQ:HRBN) is in a tight spot at the moment. While the stock hasn't reached theoretical highs yet, the pace of advance looks too fast too soon. Any more price appreciation is a signal to sell.

Energy stocks have a lot of fuel behind them when price of oil is at two year high. This is certainly helping Suntech Power (NYSE:STP) and Petrochinha Co. Ltd. (NYSE:PTR) - some of the industry leaders from the solar and the oil field. Both stocks are far from theoretical highs, suggesting more upside is possible.

For additional momentum China stocks, see overbought chart below. 

OB_2011113

There isn't much to talk about at the oversold monitor this morning. The strong day for DJIA yesterday took care of weak stocks, for the moment. 

OS_2011113

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.

aexpl-obos



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