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Moment of truth ACH, PTR, JKS, SOHU and more

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auditor1 April 15, 2014 (Chinavestor) Chinese stocks listed on US soil continue to lack momentum, expect for some larger cap, well established names. Despite some advances, even these large cap stocks are not considered overbought anymore. Investors have to scroll down to the oversold screen to find stock trading extremes such as Sohu.com Inc. (NASDAQ:SOHU) or Jinko Solar (NYSE:JKS).

First, the overbought screen. Aluminum Corp. of china (NYSE:ACH) gave back $.19 or 1.87%  on Monday after leveling off a day before. This was kind of expected after the stock hit an extreme overbought position Friday morning.

CNOOC Ltd. (NYSE:CEO) and Yanzhou Coal Mining (NYSE:YZC) look similar to Aluminum Corp. of china (NYSE:ACH) on the overbought screen below. But YZC and CEO hasn't been extremely overbought but simply has advanced to current levels.

China Unicom (NYSE:CHU) and Petrochina Co. Ltd. (NYSE:PTR) has been trading in a narrow range lately. Both have a positive bias as investors rotated from risky technology names to larger cap, mature, safe stocks. But upside potential looks limited for CHU and Petrochina (NYSE:PTR) from here because stock prices for both are above the trading envelope with little momentum.

Chinese ADR overbought monitor, April 15, 2014

ADR_OB_20140415

Jinko Solar (NYSE:JKS) remains extremely oversold as investors lost confidence in Chinese PV makers in general. The reason for such a decline comes from LDK Solar's meltdown. This former industry leader is now trading on the OTC market from the NYSE and hangs over the rests of the sector. Canadian Solar (NASDAQ:CSIQ) is another Chinese solar stock suffering from LDK's fallout.

Sohu.com Inc. (NASDAQ:SOHU) is also on the oversold side. The stock has been trading below the trading envelope for over two weeks but now is approaching theoretical low prices. Upside potential exceeds downside risk for Sohu.com Inc. (NASDAQ:SOHU), according to the oversold screen below.

Find more Chinese stock extremes at the following chart.

ADR_OS_20140415

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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