Johannesburg — LAST week's good news was that the International Monetary Fund sees the global economy pulling out of recession, and SA's growth prospects look good for next year. This forecast is back up the theory that stock markets are the barometer of economic health.

It is interesting to note that since their March lows, Australia's main market index has gained 20%, France and SA's 19%, Germany, Holland and the US's 23%, and the UK's 14%. At 56% and 31% respectively, eastern markets Hong Kong and Japan are the front-runners.

March was the low for most markets, but, while along with the rest, the JSE overall took a dip, our market has generally been recovering since November.

To take the temperature of JSE overall index I've added to the plotting short, medium and long term moving averages. Worrying is that they are drawing together, which puts its short- term bull trend in jeopardy. A sell signal was given in early June when the moving average convergence/divergence (MACD) crossed downwards through its signal line.

The MACD plotting has broken down through its zero level but now tipping upwards, there's a good chance that it will push up through its signal line within the next few days, sparking off a buying position. Neither overbought nor oversold, the index plotting is sitting on the equilibrium (centre line) of its standard deviation channel showing that it exactly where it would be expected to in the upward run since the November low. Combining chart reading and bearing in mind the improved spirit of the market, I'm expecting the Overall to continue lifting.

With a rise in the US dollar's value, together with a fall in the price of oil, gold's safe-haven status diminishes. Gold has entered negative territory, but, far from oversold, at best it may move sideways for while.

In financials, banks are in favour.

Capitec is much in demand, but likely to nudge lower before making its way towards its R55 count. As other banks are nearing overbought positions further price rises may be limited. Life insurance shares dipped and are likely to dip further. Healthcare shares are in demand but almost at the top of a cycle, may soon ease. Netcare 's longer-term count is to R121 and Medclin 's to R27.

Another new high for Naspers puts it in an overbought position from which it is likely to decline. Longer term Naspers has a count to R233. MTN's price is marking time, but is almost at the foot of a cycle which, when reached, may bounce the price through R124 giving a count to R158.

Supermarket shares are in favour. Shoprite hit a new high but is overbought likely to lose some ground before making its way to its R66 count. Pick n Pay's count it to R40, but its unlikely to reach there in it present up-leg.

At the top of a cycle, Spar will also take time to reach its R65 count. In food, at the bottom of a cycle, Rainbow's initial gain may be muted.

Jean Temkin is the author of More Charting for Profit, a textbook on technical analysis.