February 25, 2014 (Chinavestor) Investing and finding good stocks is tricky. It is scary when the China ADR Index, a composite of all NYSE and NASDAQ listed Chinese stocks, is down despite a record market close. Yet there are Chinese stocks that continue to make you money. Take a look at Qihoo 360 Technology (NYSE:QIHU), WuXi Pharma (NYSE:WX) or Aluminum Corp. of china (NYSE:ACH), for starters. Then there are much less liquid, small cap HIGH risk Chinese stocks that can make you even more. Sure, you need a strong stomach but China Nepstar (NYSE:NPD), Chindex Intl. (NASDAQ:CHDX) and China Yuchai Intl. (NYSE:CYD) are here for high risk takers.
Stocks on the decline? A Long list. Some of the most notable losers: eLong (NASDAQ:LONG), NetEase inc. (NASDAQ:NTES) and SouFun Holdings (NYSE:SFUN), just to pick a few from the second chart.
Back to the overbought screen. THe good news is that there are no extremely overbought Chinese stocks. Even China Nepstar (NYSE:NPD) is not considered extremely overbought. The stock hasn't reached theoretical highs just yet. The same goes for Aluminum Corp. of China (NYSE:ACH) and China Yuchai Intl. (NYSE:CYD).
WuXi Pharmatech (NYSE:WX) has been on fire for the last two weeks. The sstock went from the lower end of its trading range to way above it in a short period of time. The size of the arrow is somewhat alarming but again, WX is still far from theoretical highs.
Qihoo 360 Technology (NYSE:QIHU) is a silent killer. The stock is trading at all time highs yet is not considered overbvought. The pace of advance is very reasonable, according to the overbought chart.
When it comes to oversold China stocks, NetEase Inc. (NASDAQ:NTES), eLong Inc. (NASDAQ:LONG) and SouFun Holdings (NYSE:SFUN) come to ply. These three stocks lead the oversold China stock monitor today. Based on current reading, more downside is possible for all three. None of them have reached theoretical lows yet. When NTES goes down to $65 and SFUN to $70, it may be time to buy. Not right now.
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.