Since we are now in oversold, a buy oversold signal could be issued at any time.

These are among the strongest signals, but they also generate many whipsaws as they are often triggered by shorts covering. Hence, I would advise to take only a small position at the start and to build the position only if the trade works in our direction. If the PM sector starts to move up, there will be many opportunities to profit. It is not necessary to catch the lowest of the bottoms.

Finally, most leading miners will issue their earnings by Mid of February:

ABX: Feb 14
GG: Feb 11
AEM: Feb 12
NEM: Feb 21
SLW: March 18
KGC: Feb 11
AUY: Feb 18
IAG: Feb 18

IAG has already shown that its costs are sharply up and the stock has been hit.

The earnings will be those of Q4 2012. Compared to Q3 oil is up 5% and gold is down also about 5%. This means that revenues will be comparatively lower and costs will be higher.

Since the start of 2013, gold has not done much and oil price has been increasing. Therefore, on an earning growth perspective, the PM sector offers a negative growth for now.

This might be already priced in, or it might not be. I was expecting a "wash-out" on the base of anticipated poor earnings in general, but the market is already anticipating it, thanks to IAG's pre-announcement.

My plan is to be very cautious on the long side until mid February.




Pascal