The JSE all share index (20582) fell yesterday for the first time this week. The index had been rising but is still well shy of the key 22000 resistance level (it is a downward-sloping line and has fallen from 22200 since we last discussed it). Technically, we need to see a close above 22000 to end the downtrend started last May. As the index remains below this level, the bear trend remains intact and we are limited to viewing rallies as short-term counter-trend moves which are unlikely to be sustained. Sector-wise, our favourite picks are beverages, retailers, gold (see chart above) and healthcare and pharmaceuticals (see the chart of Netcare (870c) on page 2). We expect further gains, and outperformance, by these sectors. On a daily basis, there are still more new lows than new highs; more new relative lows than relative highs; more declining shares than advancing ones; greater volume on down days than on up days; fewer sustained rises than sustained falls; and so on. In other words, the bulk of the technical evidence is still overwhelmingly bearish even though the all share index has made some near-term gains. We expect further tests of the 22000 level but will need to see a break above this before we'll even contemplate an improvement in all the other indicators. JSE gold. The index has risen to test an important threeyear old resistance level. A weekly close today above the line would give a strong new technical buy signal.
