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Long list of oversold Chinese stocks

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statistics_1 April 8, 2014 (Chinavestor) The NASDAQ suffered the worst three day drop since 2011 and the Dow fell triple digits three days in a row. How did Chinese listings on the NASDAQ and NYSE do? NASDAQ listings plunged as investors rotated into value stocks. NYSE listed large cap energy, telecom and utility stocks outperformed the rest, saving face for Chinese listings.

When it comes to individual stocks, here is the landscape from Monday. Large cap CNOOC Ltd. (NYSE:CEO), Huaneng Power Intl. (NYSE:HNP),Sinopec (NYSE:SNP), and the world's largest mobile carrier China Mobile (NYSE:CHL) lifted the China ADR index. But most technology and internet names plunged.

Baidu Inc. (NASDAQ:BIDU) led the decline with a $5.84 fall. Sina Corp. (NASDAQ:SINA), China's second largest internet portal, was next. 500.com Ltd. (NYSE:WBAI) fell 6.16% and 58.com Inc. (NYSE:WUBA) plunged 5.92%. China's largest online video sharing site, Youku Tudou (NYSE:YOKU) followed closely. WuXi Pharmatech (NYSE:WX) declined $1.47 or 4.09%. Smaller Phoenix New Media (NYSE:FENG) slipped as much as 8.80%! And finally, Sohu.com Inc. (NASDAQ:SOHU) was the tenth China listing with the largest decline on Monday.

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When it comes to intelligent investing,investors better take a view from a distance. This is what the overbought and oversold indicator actually does. It places recent stock price changes into perspective.

The following Chinese stocks are considered oversold after Monday's plunge. WuXi Pharmatech (NYSE:WX), Youku Tudou (NYSE:YOKU), Sina Corp. (NASDAQ:SINA), Seaspan Corp. (NYSE:SSW), Qihoo 360 Technology (NYSE:QIHU), Sohu.com Inc. (NASDAQ:SOHU), and Phoenix New Media Ltd. (NYSE:FENG). All these stocks have reached theoretical lows and thus are ripe for a technical correction.

Interestingly, Baidu Inc. (NASDAQ:BIDU) is not considered oversold yet. BIDU will be oversold once it plunges to as low as $140. Right now BIDU is $4.5 points away from that level.   

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There are no overbought Chinese listings on the NYSE and the NASDAQ. Nam Tai Electronics (NYSE:NTE) is up there but this is an ADR with low trading quality. This renders technical indicators useless.

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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