August 8, 2011 (Chinavestor) A limited number of small market cap, low volume stocks were able to avoid disaster according to the overbought monitor, but the oversold end of the China stock universe is where action is to be found. Energy stock collapsed following the dip in oil price. China Petroleum & Chemical Corp. (NYSE:SNP) and CNOOC Ltd. (NYSE:CEO), are among the top five oversold China stocks. But Petrochina Co. Ltd. (NYSE:PTR) and Yanzhou Coal Mining (NYSE:YZC) are following them closely, highlighting how much investors shunned the sector. China Life Insurance (NYSE:LFC) is hurting as well as HSBC Plc. (NYSE:HBC), as the first chart testifies. Shanda Games (NASDAQ:GAME) and its parent, Shanda Interactive (NASDAQ:SNDA) are oversold just as well as AsiaInfo -Linkage Is (NASDAQ:ASIA).
China Petroleum & Chemical Corp. (NYSE:SNP) has reached theoretical lows and is oversold. But when market fall apart and drive stocks, even large caps can't fight the market. Price of oil fell below $84 following a global sell-off, hurting oil producer CNOOC Ltd. (NYSE:CEO) the most. But Petrochina Co. Ltd. (NYSE:PTR), the largest Chinese oil producer, is just as oversold, according to the chart below.
Chinese coal miner, Yanzhou Coal Mining (NYSE:YZC), is falling on weak coal prices. Price of coal is tied to that of oil in China, so when oil is nosediving, so is coal. While oversold, a quick rebound is unlikely at this point.
China Life Insurance (NYSE:LFC) is another large cap China stock that fell off the cliff. While the bottom may not be near, the stock is a value stock that might come handy when the market bounces back.
HSBC Plc. (NYSE:HBC), a large cap component of the Hang Seng Index (INDEXHANGSAENG:.HSI) fell hard as well.
Online gamers will start reporting earnings this week - Giant Interactive (NYSE:GA) is scheduled for Monday after the close. But investors don't seem to have an appetite for former industry leader, Shanda Games (NASDAQ:GAME) and its parent, Shanda Interactive (NASDAQ:SNDA).
AsiaInfo -Linkage (NASDAQ:ASIA) is another NASDAQ listed China stocks that is way oversold.
There is not much to see on the overbought screen - except a few names that haven't fallen apart yet. Harbin Electic (NASDAQ:HRBN) is going to report later this week with investors expecting something good - according to the overbought screen.
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.