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China stock xtremes on Sept 7

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money8 September 7, 2011 (Chinavestor) Small cap China stocks dominate the overbought chart today. Sutor Technology (NASDAQ:SUTR) leveled off on Tuesday, just as predicted. We wrote yesterday referring to Sutor Tech. (NASDAQ:SUTR) thatĀ  "more downside risk thanĀ  upside potential at this point." But Agria Corp. (NYSE:GRO) continues to defy technicals . There are tow large cap China stocks on the over bought screen today, China Unicom (NYSE:CHU) and China Petroleum & Chemical Corp. (NYSE:SNP). The first one has highly unusual momentum but Sinopec (NYSE:SNP) has a lot to go before its get overbought. Changyou.com Inc. (NASDAQ:CYOU) is back on the top of the oversold China stock chart. Notable movers on that end of the China stock universe include Synutra International (NASDAQ:SYUT) and China Real Estate Information Corp. (NASDAQ:CRIC).

Investors wonder how far Agria Corp. (NYSE:GRO) can go from here. The stock jumped 21.5% yesterday on top of previous gains. Agria Corp. (NYSE:GRO) is up 50% in the last three days of trading! The stock is obviously overbought but is a low volume stock rendering technical indicators less accurate.

China Unicom (NYSE:CHU) has been the best performing major Chinese telecom after reporting second quarter financials. Investors realize the 3G success the company has made and bet on its continued successes. The good news is that despite latest rally, the stock is trading just over $21, still far from $22.6 its current theoretical high.

China Petroleum & Chemical Corp. (NYSE:SNP) has been trading in a much narrower range and is FAR from being overbought. The reason we highlight this stock is that besides CHU, Sinopoec (NYSE:SNP) is the only other large cap stock on the overbought monitor today. This speaks volumes about the state of the markets.

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Changyou.com Inc. (NASDAQ:CYOU) has been abandoned by investors following a dismal 2011 second quarter report. The stock's been trading in a narrow range with a negative bias.

Synutra International (NASDAQ:SYUT) slid 20% in the last three trading days. The bad news is that despite the slide, the stock hasn't reached theoretical lows yet. This implies more downside is possible.

China Real Estate Information Corp. (NASDAQ:CRIC) fell %10% on Monday but again, more downside is possible., Plus this stock is a low volume ADR making the oversold indicator inaccurate. .

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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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