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China stock extremes on July 19

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profit_1 July 19, 2011 (Chinavestor) AgFeed Industries (NASDAQ:FEED) is overbought but despite recent gains, China Southern Airlines (NYSE:ZNH) might keep go higher. Fushi Copperweld (NASDAQ:FSIN), Silvercorp Metals (NYSE:SVM) and China Eastern Airlines (NYSE:CEA) are stocks with momentum albeit price appreciation is not guaranteed. China Sky One Medical (NASDAQ:CSKI) took a breather after reaching the overbought position and may continue to go higher from here as well.

 

Yanzhou Coal Mining Co. (NYSE:YZC) and JA Solar (NASDAQ:JASO) are closest to theoretical lows but downside risk persists. Hang Seng Index heavy weight HSBC Plc. (NYSE:HBC) lost momentum just like Shanda Interactive (NASDAQ:SNDA) and its online game unit, Shanda Games (NASDAQ:GAME). All these stocks might enjoy a rebound should market sentiment turn positive.

 

Back to the overbought screen. AgFeed Industries (NASDAQ:FEED) not only jumped way out of its trading envelope but has reached theoretical highs and is subject to a correction.

The largest Chinese airliner by fleet size, China Southern Airlines (NYSE:ZNH), has solid momentum that might keep it go higher.

High gold and metal prices helped Fushi Copperweld (NASDAQ:FSIN) this week and has more upside left, according to the overbought monitor.

China Eastern Airlines (NYSE:CEA) is the second largest Chinese airliner by fleet size and has upside, albeit price of airliners are subject to fluctuations of oil price. Given that oil is up 1.5% before the opening bell, chances are that CEA will have an eventful day.

China Sky One Medical (NASDAQ:CSKI) was on the top of the overbought chart late last week but has fallen back after days of declines. But after a technical correction, more upside is possible.

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Yanzhou Coal Mining Co. (NYSE:YZC), the third largest Chinese coal miner, is not oversold despite latest decline. The stock is looking for direction at this point, just like solar maker JA Solar (NASDAQ:JASO).

HSBC Plc. (NYSE:HBC), a global bank with a significant exposure to China, was on the retreat but is expected to do better.

While internet stocks did well, like Sohu.com Inc. (NASDAQ:SOHU) or Sina Corp. (NASDAQ:SINA) yesterday, former online game champion Shanda Interactive (NASDAQ:SNDA) and its online game unit, Shanda Games (NASDAQ:GAME) fell out of favor. Earnings season is just around the corner for online gamers but investors tend to prefer NetEase.com Inc. (NASDAQ:NTES) instead of the Shandas.

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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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