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Chinese oil majors to breathe after big gains

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oil3 April 4, 2011 (Chinavestor) Short term outlook is dim for Petrochina Co. ltd. (NYSE:PTR) and Yanzhou Coal (NYSE:YZC) despite high oil prices. Both stocks have approached theoretical highs after a spectacular two week run. CNOOC Ltd. (NYSE:CEO), China's offshore oil specialist, may be able to carve out some gains on Monday as oil reached 30 months high, according to the overbought monitor. Downside risk exceeds short term upside potential for UTStarcom (NASDAQ:UTSI) and Melco Crown Entertainment (NASDAQ:MPEL) as well. Sina Corp. (NASDAQ:SINA) looks somewhat vulnerable as well.

There are stock extremes on the oversold end of the China stock universe as well. China Housing & Land Development, Inc (NASDAQ:CHLN) and Spreadtrum Communications (NASDAQ:SPRD) are ripe for a bounce back but Wonder Auto Tech (NASDAQ:WATG) may have to wait for this latter one is hurt on fundamentals. WSP Holdings (NYSE:WH) has more downside left despite sizable losses.

China's oil major Petrochina Co. Ltd. (NYSE:PTR) and coal miner Yanzhou Coal Mining (NYSE:YZC) are overbought, according to the screen below. This implies these stocks will take a breather sooner than later.

But upside is not as much liminted for CNOOC Ltd. (NYSE:CEO), China's offshore driller, according to the following chart.

NASDAQ listed Chinese ADRs in vulnerable position include UTStarcom (NASDAQ:UTSI) and Melco Crown Entertainment (NASDAQ:MPEL). Both stocks have stepped way out of their normal trading range.

One has to wonder where the ceiling will be for Sina Corp. (NASDAQ:SINA). The stock looks vulnerable going forward, according to the chart below.

OB_201144

China Housing & Land Development, Inc (NASDAQ:CHLN) and Spreadtrum Communications (NASDAQ:SPRD) have reached theoretical lows, suggesting they hit bottom already. While the bounce back up is hard to predict, one thing looks more certain: downside risk is minimal.

Wonder Auto Tech (NASDAQ:WATG) may look similar on the oversold screen but the stock is hurt following allegations of financial wrongdoing. This is turn suggests the stock will be under water for quite some time.

The oversold monitor picked up the sudden fall of WSP Holdings (NYSE:WH). Despite losses, the stock hasn't reached theoretical lows yet- more downside is possible!

OS_201144

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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