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Internet, transportation stocks offer upside

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bounce_back September 27, 2011 (Chinavestor) Chinese technology and transportation stocks got hammered. Sina Corp. (NASDAQ:SINA) made a comeback by the close after a disastrous open on Monday but is still way oversold. What a change from last week when Sina Corp. (NASDAQ:SINA) was among the most overbought China stocks! Baidu.com Inc. (NASDAQ:BIDU) looks very similar to NetEase.com Inc. (NASDAQ:NTES) from a technical point of view. Both stocks are trading way below their trading ranges and are ready to bounce back. Sohu.com Inc. (NASDAQ:SOHU) is less oversold than most internet stocks at this point. Home Inns & Hotels Management (NASDAQ:HMIN) is looking very promising after yesterday's 4.71% drop. China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH) are oversold as well.

Considering that there hasn't been any significant shift fundamentally both sectors, technology and transportation, promise more upside than downside. For an overview of Chinese sector performance in September, read Sector rotation hurts technology, favors healthcare.

Airliners are actually better off when price of oil falls, a fact that makes China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH) even more attractive right now.

The only significant change concerning internet stocks was the announcement from Sina Corp. (NASDAQ:SINA) that it would filter its Weibo.com service according to China's censorship laws. But that's about it, a change that shouldn't have sunk the entire sector. Needless to say, Sina Corp. (NASDAQ:SINA) is oversold. Baidu.com Inc. (NASDAQ:BIDU) leveled off on Monday and is looking very good on the oversold screen. NetEase.com Inc. (NASDAQ:NTES) is similar to BIDU from a technical point of view. Both stocks are expected to surge should market sentiment improve. Sohu.com Inc. (NASDAQ:SOHU) is a little-bit different story. The stock has bottomed out already late last week and is expected to advance along the sector.

Another stock ready to surge is Home Inns & Hotels Management (NASDAQ:HMIN) according to the oversold indicator below.

OS_2011927

Silvercorp Metals (NYSE:SVM) has bottomed out but the basic materials sector is still hurting. There is no overbought China stock to watch at the moment.

OB_2011927

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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