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China momentum stocks in early April

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advance8 April 6, 2011 (Chinavestor) The overbought China stock monitor picked up unusual advance of China TransInfo Technology Corp. (NASDAQ:CTFO) this morning. But the most important development is that Chinese stocks seem to be ready for more upside. Stocks with sustainable momentum include 51job Inc. (NASDAQ:JOBS), CNOOC Ltd. (NYSE:CEO), Home Inns & Hotels Management (NASDAQ:HMIN), Sohu.com Inc. (NASDAQ:SOHU) and New Oriental Education (NYSE:EDU), just to name a few.  There isn't much change on the oversold screen from yesterday except for Puda Coal (NASDAQ:PUDA), a small Chinese coal miner, that fell unusually sharp over the last four days.

Taking a closer look at the overbought monitor, China TransInfo Technology Corp. (NASDAQ:CTFO) is closest to theoretical highs - ignoring low volume Noah Education Holdings (NYSE:NED). Despite over 7% gain over the past three trading days, the stock hasn't reached theoretical highs yet.

Momentum hasn't dried out for 51job Inc. (NASDAQ:JOBS), CNOOC Ltd. (NYSE:CEO) and Home Inns & Hotels Management (NASDAQ:HMIN), according to the overbought screen. Internet darling Sohu.com Inc. (NASDAQ:SOHU) is looking good as well.

Sina Corp. (NASDAQ:SINA) took a breath in the past two days, readying for more upside. Should market sentiment remain strong, Sina Corp. (NASDAQ:SINA) may go beyond the $115 level.

New Oriental Education (NYSE:EDU) made a successful; comeback after reporting a soft 2010 fourth quarter. The largest Chinese education firm on the NYSE has sustainable momentum, according to the overbought chart below.

OB_201146

Spreadtrum Communications (NASDAQ:SPRD) remains the most oversold China ADR at the moment and might pop. But the most striking development is the fall of Puda Coal (NASDAQ:PUDA) over the last couple of days. Despite heavy losses. more downside is possible.

OS_201146

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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