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Oversold internet stocks from China

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Bull_2 May 24, 2011 (Chinavestor) China Fire & Security (NASDAQ:CFSG) surged to the overbought position following news that Bain Capital will take it private. Upside is limited as long as fundamental reasons don't change. CNinsure (NASDAQ:CISG) and eLong Inc. (NASDAQ:LONG) have noticeable momentum, completing the most overbought China stock shortlist.

Internet and solar stocks fell the hardest among liquid stocks, according to the oversold monitor. Sohu.com Inc. (NASDAQ:SOHU), AsiaInfo Holdings (NASDAQ:ASIA) and Sina Corp. (NASDAQ:SINA) are the most oversold Chinese internet stocks at the moment. Solar stocks continue to suffer one disappointing earnings after another. Yingli Green Energy (NYSE:YGE), ReneSola Ltd. (NYSE:SOL) fell hard after JA Solar (NASDAQ:JASO) missed consensus estimates and guided lower.

Internet stocks suffer from negative moneyflows after successful social networking IPOs made them vulnerable. Sina Corp. (NASDAQ:SINA) was trading at all time highs a month ago but fell over 25% since then. Sohu.com Inc. (NASDAQ:SOHU) is just like Sina Corp. (NASDAQ:SINA) - a strong 2011 Q1 showing was not enough to keep its stock price near all time high. AsiaInfo Holdings (NASDAQ:ASIA) fell hard on high volume yesterday, highlighting the technical weakness of the stock. But Sohu.com (NASDAQ:SOHU) and Sina Corp. (NASDAQ:SINA) are looking much better for their latest decline was of light volume. This may suggests these latest two are oversold and might enjoy a bounce back.

Prominent stocks from the Chinese solar sector, Yingli Green Energy (NYSE:YGE) and ReneSola Ltd. (NYSE:SOL) are oversold, according to the chart below. JA Solar (NASDAQ:JASO) reported on Monday, missing estimates and issuing a lackluster guidance for the rest of the year. More downside is possible despite technical weakness for all these solar stocks for the short term.

OS_2011524

There is not much to see on the overbought China stock screen. News that CFGS may go private jumped the stock but upside is certainly limited. Elong Inc. (NASDAQ:LONG) jumped after Tencent Holdings (HKG:0700) and Expedia.com (NASDAQ:EXPE) made a strategic investment into eLong Inc. (NASDAQ:LONG), but that effect won't drive the stock price any higher from here.

OB_2011524

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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