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China stock extremes on the fall, autos remain volatile

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auto March 22, 2011 (Chinavestor) There is no overbought China stocks that the moment, according to the chart below. Home Inns & Hotels Management (NASDAQ:HMIN) and Yanzhou Coal Mining (NYSE:YZC) are stocks of interest on for today. The number of oversold China stocks fell from last week as well. Auto related stocks fell, notably Wonder Auto Technologies (NASDAQ:WATG) and China Automotive Systems (NASDAQ:CAAS) are stocks of interest on the oversold screen. China XD Plastics (NASDAQ:CXDC) is not on the oversold screen but is another auto parts stock that suffered along the rest of the sector. China Green Agriculture (NYSE:CGA) fell hard just like China Sunergy (NASDAQ:CSUN), a Chinese solar company did.

 

 

Home Inns & Hotels Management (NASDAQ:HMIN) is far from theoretical highs but has shown sound momentum, according to the overbought screen. Upside is far from limited at this point, the stock may go as high as $43 for the short term.

Yanzhou Coal Mining (NYSE:YZC), the only NYSE listed Chinese coal miner, has been on the roll on the back of high oil prices. Price of coal is tighten to oil in China and events in Libya are helping the top line of China's third largest coal miner.

Some additional small caps have shown momenum but nothing extraorfdinary at this point.

OB_2011322

Chinese car parts manufacturers came under fire as most of their representatives suffered heavy losses lately. Wonder Auto Technologies (NASDAQ:WATG) and China Automotive Systems (NASDAQ:CAAS) are on the oversold screen and call for a correction. China XD Plastics (NASDAQ:CXDC), a large Chinese plastic parts manufacturer, fell over 4% just yesterday, highlighting the volatility of the sector. While auto sales numbers were soft in January, February data suggested demand is back - though some fear that the auto sector will experience a cool-off as government rebates start to expire.

China Green Agriculture (NYSE:CGA) remained volatile as the overswold chart testifies. The stock may go either direction from here, despite sizable losses.

The weakness of China Sunergy (NASDAQ:CSUN) is somewhat a surprise given high oil prices and the resurrection of the sector last week.

OS_2011322

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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