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DJIA 300 points surge moves China stocks

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advance9 December 21, 2011 (Chinavestor) LDK Solar (NYSE:LDK) took a breather on Tuesday and is not overbought anymore. Soufun Holdings (NYSE:SFUN) and Seaspan Corp. (NYSE:SSW) have sound momentum according to the chart below. Stocks with sound 50-DMA and 200-DMA on the overbought chart include China XD Plastics (NASDAQ:CXDC), Huaneng Power (NYSE:HNP), Sinopec (NYSE:SNP) and The9 Ltd. (NASDAQ:NCTY). Previously oversold China Mobile (NYSE:CHL) is off the leading position after a sound 2.4% bounce back on Tuesday. Sina Corp. (NASDAQ:SINA), Baidu.com (NASDAQ:BIDU) and E Commerce China (NYSE:DANG) are still below their trading envelope despite a surge on Tuesday.

Back to the overbought chart. LDK Solar (NYSE:LDK) is trading well above its trading envelope but is off the extreme overbought position. More upside is possible albeit downside risk is high.

Soufun Holdings (NYSE:SFUN) and Seaspan Corp. (NYSE:SSW)look similar on the chart below. Both stocks stepped out of their trading ranges but haven't stretched too thin just yet. Strong money flows continue to support Seaspan Corp. (NYSE:SSW), a plus for this China play.

Investors paying attention to technical indicators like China XD Plastics (NASDAQ:CXDC), Huaneng Power (NYSE:HNP), Sinopec (NYSE:SNP) and The9 Ltd. (NASDAQ:NCTY).These stocks are trading above their 50-DMA and 200-DMA as well, a positive sign according to technical analysts. Read China Momentum stocks before Xmas for stocks specific charts.

OB_20111221

One of the most striking development from Tuesday is that China Mobile (NYSE:CHL) is off the extreme oversold position. Despite a significant advance Sina Corp. (NASDAQ:SINA), Baidu.com (NASDAQ:BIDU) and E Commerce China (NYSE:DANG) are still on the oversold chart, suggesting more upside is possible for these companies.

OS_20111221

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.

aa_OBOS_expl_2weeks


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