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Oversold China stocks to track in March

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economy2 March 2, 2011 (Chinavestor) WuXi Pharmatech (NYSE:WX) remains oversold while Cogo Group (NASDAQ:COGO) bounced back up from yesterday. 3SBio Inc. (NASDAQ:SSRX) is another stock with  limited downside risk from here on. ChinaCast Education (NASDAQ:CAST) is another stock with significant loss of momentum - but more downside is possible, according to the oversold chart.

Ata Inc. (NASDAQ:ATAI) was able to hang on to previous gains on Tuesday, a positive development for this overbought stock. Silvercorp Metals (NYSE:SVM) and Yucheng Technologies (NASDAQ:YTEC) are stocks of interest on the overbought chart as well.

But the triple digit fall of the Dow took a toll on the oversold end of the China stock universe. WuXi Pharmatech (NYSE:WX) fell for the sixth day in a row and is considered oversold. Another oversold stock from yesterday, Cogo Group (NASDAQ:COGO) jumped 3.1% on Tuesday.

3SBio Inc. (NASDAQ:SSRX) is another stock with a 6 day losing streak. Oversold stocks have limited downside risk, something intelligent investors have to consider.

ChinaCast Education (NASDAQ:CAST) fell 5.48% on Tuesday and is off 18% over the last 30 days, but the stock is not considered oversold.

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Ata Inc. (NASDAQ:ATAI) took a breath on Tuesday and is not as overbought as it used to.

Silvercorp Metals (NYSE:SVM) is up 27% over the last 30 days and is accelerating. This is different from Yucheng Technologies (NASDAQ:YTEC), a stock that has just a short term momentum. Both stocks are far from theoretical highs, leaving more room to the upside.

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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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