August 15, 2011 (Chinavestor) There are no overbought Chinese stocks at the moment, despite some sizable gains last week. Xinyuan Real Estate (NYSE:XIN) crushed estimates to the upside last week, setting the sector on fire. China Housing & Land Development (NASDAQ:CHLN) will report just as we speak this morning determining the direction for the stock from here. ChinaCast Education (NASDAQ:CAST) surged on Friday and the overbought indicator picked up the uptrend in New Oriental Education (NYSE:EDU) as well. China Southern Airlines (NYSE:ZNH) is back on the screen as well, just like Sohu.com Inc. (NASDEAQ:SOHU) among internet stocks and are looking good from a technical point of view. Investors expressed some level of confidence into General Steel (NYSE:GSI) ahead of earnings and pushed the stock higher. But earnings didn't work out for AsiaInfo-Linkage (NASDAQ:ASIA) and sent the stock tumbling over 10% on Friday. The stock is not oversold yet. Petrochina Co. Ltd. (NYSE:PTR) and China Unicom (NYSE:CHU) are among the most oversold NYSE listed China stocks and thus offer the most upside.
Earnings expectations sent General Steel (NYSE:GSI) higher last week but that might change should the company not meet expectations. General Steel (NYSE:GSI) is scheduled to report before the opening bell today.
ChinaCast Education (NASDAQ:CAST) rose last Friday along with industry leader New Oriental Education (NYSE:EDU). CAST reported sound earnings and guided higher, helping restore sentiment into the sector.
China Southern Airlines (NYSE:ZNH) has sound fundamentals and with oil back to the $80s from the $100s just two weeks ago, outlook is improving. Expect China Eastern Airlines ()NYSE:CEA) to do well on Monday as well.
Chinese internet stocks regained some of their ground last week, with Sohu.com Inc. (NASDEAQ:SOHU) doing the best. Despite a 10% rally late last week, more upside is possible for the stock.
AsiaInfo-Linkage (NASDAQ:ASIA) was the worst Chinese ADR last Friday with a 13.7% dive. The company missed estimates and plummeted. But despite the drop, the stock is not considered oversold, leaving more room to the downside.
Upside potential exceed downside risk for Petrochina Co. Ltd. (NYSE:PTR) and Chinese energy stocks in general. Yanzhou Coal Mining (NYSE:YZC) surged over 7% in Asia, boding well for the rest of the sector.
China Unicom (NYSE:CHU) is the most oversold among Chinese telecoms and is offering the most upside on Monday.
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.