Random Musing

I was pontificating the recent market action and thought I would post my musing.
Gold has been a leader in the market since Nov 08 when it bottomed before the indices did. Since then the two have pretty much moved in tandem, but gold usually bottoms and tops before the indices do. Recent action has gold topping well before the indices, as seen in the accompanying chart. When I say topping I do not mean bull market top, but rather profit taking, which is healthy action. Could it be something more sinister? Sure it could, but I think the action in the charts would pretty much telegraph that in plenty of time to prepare ourselves for such an event. Plus seasonality is on our side at the moment.
Now that gold has made a substantial correction and is in the process of bottoming in my opinion. I believe the indices are in catch up mode and once this process of catch up is completed the prevailing uptrend will resume. What level would I expect $SPX to hit for this process to have climaxed? I presume right around 1090-1100, but markets do like to test the extreme's and the weak. While the $SPX is testing or nearing the mentioned levels. I would expect gold to be shaping up the right side of its base in preparation for a move to new highs. Which in turn will give further indication it is safe to initiate positions on the long side again in the indices and individual stocks in other sectors. At the point gold and the miners are nearing new highs I will probably exit most (90%) of my gold plays and evaluate the current situation at that time.
In the accompanying chart when I say gold I am using the ETF proxy for gold which is GLD and is the solid back line. This chart just provides illustration of the price performance between GLD and $SPX.