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Oversold China stock list expands

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watch_out September 29, 2011 (Chinavestor) The number of oversold Chinese stocks has grown dramatically. Home Inns & Hotels Management (NASDAQ:HMIN) is the most striking example. A stock not on the oversold screen a day before "advanced" to the top of the list. Focus Media Holdings (NASDAQ:FMCN) is second on the list. Woes continue for Baidu.com Inc. (NASDAQ:BIDU) as well. While not oversold to the extremes, the stocks clearly took a beating. Similarly to China's search engine giant, Sina Corp. (NASDAQ:SINA) is oversold. Sohu.com Inc. (NASDAQ:SOHU) and NetEase.com Inc. (NASDAQ:NTES) are trading close to theoretical lows well below their trading ranges as well. Related article: Sector rotation hurts technology favors health care As far as the overbought end of the China stock universe, forget about it for today.

As investors know, devil is always in details. Home Inns & Hotels Management (NASDAQ:HMIN) is oversold to the extremes. The stock fell hard, reaching theoretical lows and is way below its trading range. Technicals suggest the stock is ready to take a breather right here.

 

But Focus Media Holdings (NASDAQ:FMCN) is not as oveersold and may continue to fall.

Baidu.com Inc. (NASDAQ:BIDU) has been trying to break away from the low $120 range with little success. The stock is not oversold to the extremes but is certainly cheap on valuation. P/E for he stock is just above 50, half of what is twas not too long ago.

Sohu.com Inc. (NASDAQ:SOHU) is another internet stock ready for a comeback. The stock hit 52 week lows yesterday yet is fundamentally solid as a rock. Bottom fishing : SOHU at 52 week lows

Sina Corp. (NASDAQ:SINA) is very similar to Sohu.com Inc. (NASDAQ:SOHU). Both are in the same Internet sphere and are fundamentally solid. The fall of Sina Corp. (NASDAQ:SINA) has been more spectacular albeit Sohu.com Inc. (NASDAQ:SOHU) is trading closer to theoretical lows at the moment.

NetEase.com Inc. (NASDAQ:NTES) is another sound Internet play. The company has no debt, has been growing fast and has positive cash lows. Yet is trading well below its trading range.

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There is not a single China stock on the overbought screen that would raise our eyebrows today.

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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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