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Chinese airliners rock but solars collapse

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bear_bull May 18, 2011 (Chinavestor) One trade at the end of the day sent eLong Inc. (NASDAQ:LONG) up 50% for the day - but this is obviously a fluke. CNinsure (NASDAQ:CISG) was able to hang on to gains on Tuesday but it's Chinese airliners, China Eastern Airline (NYSE:CEA) and China Southern Airline (NYSE:ZNH) that have sustainable momentum on the overbought screen.

Chinese solar stocks fell amid Trina Solar's (NYSE:TSL) first quarter report yesterday. ReneSola Ltd. (NYSE:SOL), JA Solar (NASDAQ:JASO), Yingli Green Energy (NYSE:YGE) are all oversold, but not to the extremes yet. More downside is possible. LDK Solar (NYSE:LDK) has been oversold for some time but the slide may continue here as well.

The overbought end of the China stock screen is less vivid this morning. eLong Inc. (NASDAQ:LONG) is a fluke, CNinsure (NASDAQ:CISG) goes public - all not much interest for traders at this point. But lower oil prices continue to support China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH). Mindray Medical (NYSE:MR) and ChinaCast Education (NASDAQ:CAST) are looking good ahead the opening bell on Wednesday.

OB_2011518

China Precision Steel (NASDAQ:CPSL) may be the most oversold stock, but it's the Chinese solar sector that's the most interesting development for the day. ReneSola Ltd. (NYSE:SOL), JA Solar (NASDAQ:JASO), Yingli Green Energy (NYSE:YGE) have all closed in on theoretical lows but more downside is possible. LDK Solar (NYSE:LDK ) has been leading the oversold screen but has moved up in the ladder. See chart below to find additional oversold stocks.

OS_2011518

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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