Broad Perspective - SP500, Gold, Miners and USD
S&P500 (Monthly) - is a mere touch away from its peak in 2000 and 2007. Its MACD & stochastic are at a huge overbought level while volume of its rally since 2009 continues to drop and remains at a dismal level. Technically speaking, the index is up for a big test even if it could eventually rally another 50 points to reach the previous peak levels. Given that it is currently trading at consensus FY13 PE of 13.5x versus its EPS growth forecast of 10% (source: Bloomberg), valuation seems fair at best if not overvalued. However, as FY12's actual earnings growth is only about 4.7%, the critical question here is: can we trust the current consensus number and not expecting further earnings downgrades just like what we saw in the past 12 months? Very unlikely unless we could see strong earnings drivers going forward.
Gold (Monthly) - on stochastic indicator, prices have already retraced to the level last seen in 2008 and turned positive since August 2012. However, since the MACD has further room to contract, I believe prices are in the midst of tracing out and attempting to turn positive in coming weeks. Indeed, the multi-month bull trend has a solid support of gold price at USD 1,500 before the trend can be broken!
Gold (Weekly) - more interestingly, this highly probable reversed Head & Shoulder pattern could spell wonder for gold prices. Assuming the pattern is confirmed with a breakout of its neckline at about USD 1,800 in coming weeks, its minimum textbook H&S target is at USD 2,150.
Miners (Monthly) - In spite of so many gloomy views on miners in recent months due to HUI's inability to sustain the momentum after a recent breakout from 2012's low, this chart looks rather comforting in that it does not seem to be bearish in whatever way i look at it. Similiar to gold, its stochastic has already turned positive since the end of August 2012. More importantly, its MACD is approaching the bottoming level last seen in 2008. The only negative here is that its MACD has not yet turned positive. The absolute support for its bull trend line is at about 350 level or 11% away from the last closing price.
DXY (Monthly) - USD remains trapped in its downtrend since the peak
in 2001. It is touching the upper bound of downtrend line with further room
to decline on its stochastic while MACD is attempting to cross down negatively.
DXY (Weekly) - The clear Complex Head & Shoulder pattern since the beginning of 2012 remains constructive of a breakout to the downside. We should be able to see the confirmation of this in coming months, if not weeks.
In conclusion - equities are heavily stretched upward while gold & miners are increasing close to their respective intermediate and overstretched corrections since 2011's peak. For bull believers and wannabe, it may be worthwhile to keep a close eyes for potential long positions soon.