Focusing on Gold Miners

 | Feb 22, 2012 | 10:45 AM EST  | Comments
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Stock quotes in this article:

ag

,

cde

,

aumn

,

baa

,

mgam

,

pkt

The action is very choppy in the early going as dip-buyers stepped up on early weakness, but they aren't generating significant upside momentum. Breadth is running slightly negative with oil and chips leading. Steel, solar energy and regional banks are lagging. Financials are the biggest concern.

Precious metals are down slightly, but I'm watching that group closely as I believe the technical action has been promising. Silver miners are showing better relative strength than gold miners are and I am focusing on them. I've established a position in First Majestic Silver (AG), which is supposed to grow earnings 51% to $1.57 in 2012, and is selling with a trailing price-to-earnings ratio of just 21. Coeur d'Alene Mines (CDE) and Golden Minerals Co. (AUMN) are other silver plays that I like.

In the gold group, the best chart I see is Banro Corp. (BAA), which is working on a breakout through recent highs.

Outside metals, it is very mixed bag with technical patterns not doing much. A lot of flippers are sitting on anything that moves, and that is keeping the hot money sidelined. Multimedia Games Holding Co. (MGAM) and Procera Networks (PKT) are interesting, but they aren't working right now.

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