August 5, 2011 (Chinavestor) Looking at the oversold monitor today, one can't miss the over representation of energy stocks on the monitor below. Four out of the five most oversold stocks came from the energy sector. Petrochina Co. Ltd. (NYSE:PTR), the largest oil producer in China, fell all the way to theoretical lows as price of oil collapsed. CNOOC Ltd. (NYSE:CEO), China's offshore oil drilled, followed suit. WuXi Pharmatech (NYSE:WX) is the only non energy component of the mix. Yanzhou Coal Mining (NYSE:YZC), China's third largest coal miner comes next. China Petroleum & Chemical Corp. (NYSE:SNP), known as Sinopec, completes the list of the top five oversold stocks. Ku6 Media (NASDAQ:KUTV) is oversold as well and the list goes on...There are no overbought China stocks to speak of, it's hard enough to find stocks that are ahead after the week long bloodbath.
The sell-off on Thursday sent Chinese oil producers tumbling all the way to the bottom, suggests the oversold monitor. Petrochina Co. Ltd. (NYSE:PTR) has reached theoretical lows and is ready for a comeback, according to the monitor below. But it's the all important jobs report that can stop oil from falling apart, eventually telling the market where price of oil is going to be. While it may be tempting to jump into PTR right now, market sentiment still pays key role in determining where Petrochina Co. Ltd. (NYSE:PTR) is going to be next.
The same logic applies to CNOOC Ltd. (NYSE:CEO), China's pure oil producer. The only reason the arrow is smaller for CNOOC ltd. (NYSE:CEO) is that the stock has been on a slide for a month thus yesterday's dive didn't have such a large impact.
Similar to Petrochina (NYSE:PTR), China Petroleum & Chemical Corp. (NYSE:SNP) fell all the way to the bottom. But investors have to consider that Sinopec (NYSE:SNP) is China's largest oil refiner and as such is a straight beneficiary of falling oil prices. Refining margins improve when price of oil falls.
Price of coal is tied to that of oil in China, making the case difficult for Yanzhou Coal mining (NYSE:YZC). The stock is oversold but again, the jobs report is in the driver seat at this point.
Ku6 Media co. (NASDAQ:KUTV) is NASDAQ listed and oversold. Given that this company is a lot more volatile than its larger NYSE listed counterparts, a bounce back is more likely should market sentiment normalise.
There are no overbought China stocks to speak of today. Harbin Electric (NASDAQ:HRBN) and Ata inc. (NASDAQ:ATAI) managed to eke out some gains that the overbought monitor picked up. Noah Education holdings (NASDAQ:NED) surged yesterday helping lift stocks from the sector.
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.