March 12, 2010 (Chinavestor) It's been worth paying attention to technical indicators. Momentum dried up for all top four overbought stocks yesterday, making way for newcomers. Fushi Copperweld (NASDAQ:FSIN) remains overbought and is going to hit the ceiling soon, according to the overbought chart below. Shares of Baidu.com (NASDAQ:BIDU) closed above $550 for the first time in history and the stock is not considered  overbought. But with no reason to go higher, don't expect much from China's top search engine company on Friday. Notable new additions on the the overbought chart include New Oriental Education & Tech. Group Inc. (NYSE:EDU) and ShengdaTech Inc. (NASDAQ:SDTH).

The first thing that comes to mind by looking at the overbought chart this morning is that most of the momentum is gone from yesterday. Only Fushi Copperweld (NASDAQ:FSIN) remains in the danger zone out of the top four stocks we highlighted yesterday. Shares of China Southern Airlines (NYSE:ZNH), E-House Holdings (NYSE:EJ) and China Finance Online (NASDAQ:JRJC) fell on Thursday, as expected. But overbought is not the same as bearish - it merely infers that the stock has risen too far too fast and might be due for a pullback. E-House Holdings (NYSE:EJ) is expected to show additional strength based on fundamentals. The company reported record 2009 year and pays cash dividend to shrink its cash pile. Banner year for EJ witch cash dividend.

But shares of China Southern Airline (NYSE:ZNH) hit a roadblock with no catalyst to keep it go higher. China Finance Online (NASDAQ:JRJC) is going to report quarterly and full year results on Monday, expect volatility to remain high for the stock.

Weekly Buy and Sell stock list with e-mail ALERT

It's Friday, time to send out the latest Weekly Stock Buy update! If you like our Overbought/Oversold report, you will love this! We combine technicals with fundamentals and risk to come up with two set of stocks: BEST and TOAST. The first list you get is the best momentum stocks from the China stock universe. They tend to carry over momentum for the week. Then you will have the list of the most oversold stocks that tend to pop up. We publish this list every Friday at 3:30 before the market closes so you don't miss out on any gap up on Monday morning.

The overbought monitor caught the rally of New Oriental Education & Tech. Group Inc. (NYSE:EDU) and ShengdaTech Inc. (NASDAQ:SDTH). None of these stocks have approached theoretical highs yet or are trading at extremes at this point. Additional upside is depending on market sentiment and fundamentals. ShengdaTech Inc. (NASDAQ:SDTH) is going to report next Monday while New Oriental Education & Tech. Group Inc. (NYSE:EDU) will report later in April.

Most overbought China stock list

Most oversold China plays have already bottomed out. But WuXi Pharmatech (NYSE:WX) continues to show weakness and is expected to under-perform on Friday. City Telecom (NYSE:CTEL) has been on a slide but is far from the classical oversold position - thus more downside is possible.

Fundamentals suggests differently than technicals for Changyou.com (NASDAQ:CYOU), the former online game unit of Sohu.com (NASDAQ:SOHU). The company reported revenue and earnings growth for the fourth quarter outperforming industry leader Shanda Interactive (NASDAQ:SNDA) or Giant Interactive (NYSE:GA). Shanda, Perfect World reports Q4 - Changes in Chinese online game landscape.

Lack of action is hurting China Natural Resources Inc. (NASDAQ:CHNR). With not much investor's interest in sigh short-term outlook for the stock is dim.

Most oversold China stocks

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.