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CHL oversold, lacks support

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decline3 March 21, 2014 (Chinavestor) There are a good number of extremely oversold Chinese stocks to pick this Friday. China Mobile (NYSE:CHL), the largest mobile operator in the world, slipped $1.08 or 2.52% on Thursday and is now officially oversold. SouFun Holdings (NYSE:SFUN), a liquid trading stock from the NYSE, is also extremely oversold. Yingli Green Energy (NYSE:YGE), China Finance Online (NASDAQ:JRJC) and Ku6 Media (NASDAQ:KUTV) are also stocks of interest according to the oversold China stock monitor.

Large cap, liquid Chinese stocks don't get too often oversold like China Mobile (NYSE:CHL) is today. The reason for the decline is fundamental though. CHL reported the first annual profit decline in 14 years. When fundamentals are behind the decline, even the best technical indicators get goofed up. This means there is potentially more downside for CHL on Friday despite an extreme reading on the following chart.

SouFun Holdings (NYSE:SFUN) is different though. SFUN fell to an extreme oversold position not on fundamentals but on lack of investor interest. When a stock like SFUN reached theoretical lows and gets extremely oversold, most of the time it bounces back up. This may be the case with SFUN on Friday. A potentially interesting play for the short term.

Yingli Green Energy (NYSE:YGE) fell all the way from the top of its trading range to theoretical lows. This is an unusually sharp decline and current technical reading suggests YGE may bounce back up.

KUTV fell too hard, too much as well. 51job Inc. (NASDAQ:JOBS) is similar to KUTV on the technical screen below.

But Home Inns & Hotels Management (NASDAQ:HMIN) is stuck at lower levels just like Spreadtrum Communications (NASDAQ:SPRD).

See following chart  for details. 

ADR_OS_20140321

There are no overbought Chinese stocks at the moment. Don't be fooled by the strong showing of WSP Holdings (NYSE:WH). This is a low market cap, low trading volume stock that is just not fit for such technical indicators. Ignore WH's reading for today.

Other than WH, no China stock sticks out on the overbought monitor.

ADR_OB_20140321

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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