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Can Chinese internet stocks fight the market?

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question_3 September 30, 2011 (Chinavestor) Friday is going to be an exciting day for investors. Not only is voluminous economic data on the menu but some high profile China stocks are trading at extremes as well. Baidu.com Inc. (NASDAQ:BIDU) is clearly oversold but the question is if the company was able to fight the market. Focus Media Holdings (NASDAQ:FMCN), Home Inns & hotels Management (NASDAQ:HMNI) and Shanda Games (NASDAQ:GAME) are stocks of special interest for today. Sina Corp. (NASDAQ:SINA) and Sohu.com Inc. (NASDAQ:SOHU) were not immune to a broad sell-off hitting the Internet sector on Thursday. Acorn International (NYSE:ATV) surged as much as 21.3% on Thursday but low volume and a low base makes this stick less interesting from the overbought screen.

Most of the action is taking place on the oversold end of the China stock universe. The largest NASDAQ listed Chinese stock, Baidu.com Inc. (NASDAQ:BIDU), fell to theoretical lows and is ready to make a comeback. But should market sentiment turn negative, the stock many not be able to fight the market on Friday.

When industry leaders fall, rest of the sector follows. This is the case with Sina Corp. (NASDAQ:SINA), a stock that fell 9.7% on Thursday and is oversold. Smaller Sohu.com Inc. (NASDAQ:SOHU), operator of the fourth largest website in China, is also suffering. NetEas.ecom Inc. (NASDAQ:NTES) is not as oversold as the rest of the sector nevertheless is a stock of interest for bargain hunters.

Home Inns & Hotels Management (NASDAQ:HMIN) fell to extremes on Wednesday and was ready to take a break. But now that the stock is away from extreme oversold position, more3 downside is possible along industry lines.

Shanda Games (NASDAQ:GAME) is added to the mix today but the stock has more downside left.

Focus Media Holdings (NASDAQ:FMCN) fell hard on Thursday amid heavy volume. But the stock hasn't reached theoretical lows yet and as such may continue to suffer.

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Despite some high profile gains from smaller names, there is not much to see on the overbought monitor today. Acorn International (NYSE:ATV) stepped above its trading range but low volume makes the stock hard to predict.

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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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