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Momentum stocks to soar, Oct. 27

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advance7 October 27, 2011 (Chinavestor) The overbought screen is back in play today. Sstocks with insatiable momentum include E-House Holdings (NYSE:EJ), Spreadtrum Communications (NASDAQ:SPRD), and Silvercorp Metals (NYSE:SVM). Despite significant advances, these stocks are ready to advance even more. Petrochina Co. Ltd. (NYSE:PTR) and Synutra Int. (NASDAQ:SYUT) has more upside left, as well. Stocks offering significant upside from the oversold screen include LDK Solar (NYSE:LDK), Canadian Solar (NASDAQ:CSIQ) and Sina Corp. (NASDAQ:SINA).

The overbought monitor works best for larger, liquid stocks. For this reason we will skip Vimico Int. (NASDAQ:VIMC), Chindex Int. (NASDAQ:CHDX) and the like from today's analysis.

E-House Holdings (NYSE:EJ) is trading well above its trading envelope but hasn't reached theoretical highs yet. This, combined with strong index futures, suggests more upside is possible for the stock this morning.

The same is true for Spreadtrum Communications (NASDAQ:SPRD) and Silvercorp Metals (NYSE:SVM).

Rising oil prices bode well for China's largest oil producer, Petrochina co. Ltd. (NYSE:PTR). More upside is not just possible but is likely.

Synutra International (NASDAQ:SYUT), a Chinese infant formula maker, is looking strong from a technical point of view as well.

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Chinese solar stocks haven't recovered yet, according to the oversold screen. LDK Solar (NYSE:LDK) is not oversold in a classical sense but is among the 25 China stocks trading closest to theoretical lows. Canadian Solar (NASDAQ:CSIQ) is similiar to LDK Solar (NYSE:LDK) from a technical point of view. Both stocks are expected to do very well going forward, as Europe is sorting out a solution to its debt crisis. And while index futures point to a higher open, investors may want to take profits off solar stocks in case market sentiment dives on some random news.

Sina Corp. (NASDAQ:SINA) is also on the oversold screen. The stock is far from being oversold but is trading at the low end of its trading range. Upside potential exceeds downside risk for the stock at this point. But with Baidu's earnings around the corner, volatility is on the rise for internet stocks.

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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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