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Oversold solars, internet stocks for investors

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forecast_2 March 14, 2011 (Chinavestor) Chinese solar stocks fell hard last week, evidenced by China Sunergy (NASDAQ:CSUN), Canadian Solar (NASDAQ:CSIQ), JA solar (NASDAQ:JASO) and LDK Solar (NYSE:LDK) on the oversold monitor this morning. Spreadtrum Communications (NASDAQ:SPRD) and Zhongpin Inc. (NASDAQ:HOGS) dropped unusually hard as well, according to the oversold chart below.

There are no overbought Chinese stocks at the moment. Shanda Interactive (NASDAQ:SNDA) has been catching up with Shanda Games (NASDAQ:GAME) last week. Sina Corp. (NASDAQ:SINA) is looking very strong as investors sought refuge in large, liquid internet names last week. Investors have to consider that upside is not limited for Focus Media Holdings (NASDAQ:FMCN) or Sohu.com Inc. (NASDAQ:SOHU) despite sizable gains last week.

Falling oil prices don't support a bounce back for solar stocks, but some of them are oversold to the extremes and might do it anyway. China Sunergy (NASDAQ:CSUN), Canadian Solar (NASDAQ:CSIQ), and JA solar (NASDAQ:JASO) have approached theoretical lows and are ready to move higher. LDK Solar (NYSE:LDK) is also considered oversold and should prominent names of the sector move higher, chances are that LDK won't sit tight either.

Unusual drop of Spreadtrum Communications (NASDAQ:SPRD) and Zhongpin Inc. (NASDAQ:HOGS) call for attention for these stocks have upside potential.

OS_2011314

With no extremely overbought China stock on the chart today, upside is not limited to these ADRs. Shanda Interactive (NASDAQ:SNDA) is looking good despite sound gains last week. Shanda Games (NASDAQ:GAME) jumped 18% the day it surprised Q4 to the upside. Sina Corp. (NASDAQ:SINA) hasn't reached theoretical highs either, suggesting more upside is possible. The same is true for Sohu.com Inc. (NASDAQ:SOHU), another Chinese internet stock that is trading near 52 week highs.

OB_2011314

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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