A time to Cheer?

Long Cheer reported better than expected earnings for the year ended 30 June 2006. At the EPS of 11.2 cents, it is current trading at 9.4x and based on DBS latest report on 24 Aug 2006, the projected EPS for 2007F is 16.6 cents. That will translate into a prosepective PE of only 6.3x! (if the projections are accurate).

However the short term technical picture presents a less bullish scenario with the appearance of a doji and overbought indicators (Bollinger Bands, Stochastic, MACD). My short term view is that it will correct down towards the 95-97 cents in the coming days (where the first support is in the middle of the long candle on 23 Aug 06). The stock has also reached its technical objective of 106 from the breakout of its neckline at 87.

While the fundamentals over the longer term looks good, it may be a good idea to hold off your purchase if you are thinking of buying at this juncture. My short term 'bearish view' will be negated if 106 was taken out convincingly.