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Momentum China stocks for February 4

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advance2 February 4, 2011 (Chinavestor) The overbought end of the China stock universe has couple of names to watch out for. Mindray Medical (NYSE:MR) crept higher and became overbought. The jump on Tuesday kept Focus Media Holdings (NASDAQ:FMCN) close to theoretical highs but after two days of trading sideways, more upside is possible. Internet darling Sohu.com Inc. (NASDAQ:SOHU) and Baidu.com Inc. NASDAQ:BIDU) are trading well out of their trading ranges as well. Spreadtrum Communications (NASDAQ:SPRD) is another volatile stock investors have to be careful with.

Medical equipment maker Mindray Medical (NYSE:MR) advanced 6% for the week and it seems too much for the stock. While a temporary leveling off if the most likely scenario, the stock might go higher as earnings approach. Mindray Medical (NYSE:MR) had been highly volatile after earnings and thus have more upside potential should financials be strong.

Baidu.com Inc. (NASDAQ:BIDU) has been creeping higher following the 10% plus jump on Tuesday. The stock hasn't reached theoretical highs yet, leaving more room to the upside.

Sohu.com Inc. (NASDAQ:SOHU) is very similar to Baidu.com (NASDAQ:BIDU) from a technical point of view. These stock might continue to trade in tandem.

Spreadtrum Communications (NASDAQ:SPRD) remains susceptible to profit taking after a 20% advance for the week.

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The oversold end of the China stock universe is missing action for not a single Chinese ADR is trading at oversold extremes.

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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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