Inflation is a worldwide phenomenon. We may envy our trading partners’ low inflation figures, and also wish our retail turnover was picking up as quickly as theirs. But some overseas interest rates are almost down to nil.

If, for example, a country’s inflation rate is 1,5% and bank saving earns 0,5%, with the value of the saving eroding by the difference between the two, why save? No wonder British retailers had bumper Christmas sales.

We’re not in that situation yet, but the gap between interest rates and inflation is narrowing. We know for certain that Eskom’s rates will rise and fuel and food prices probably rise. Should interest rates be lowered and credit restrictions eased, we too may as well spend.

The chart compares the repo rate with the JSE retail index over a 13-year period when the repo rate’s high was 21,86% and its low 7%. Initially, the index fell as rates rose, and then held steady until 2003 when the retail boom began. The boom gathered momentum as rates fell. There was a sharp index down-kick when rates began rising again but this was soon reversed and the index reached its peak in May 2007. The boom ended as the repo reached 9%, a few months before it hit 12%.

With the share market crash, the retail index fell 66%, but it has already clawed back 62% of that loss. I’ve overlaid a stochastic oscillator, which has accurately warned of forthcoming dips and rises. Now the oscillator is in a similar position to that in early 2003. As the chart is long-term, so is the stochastic’s signal, but, as the market sank last week, retail was one of the few indices that continued upwards, and it gave a new short-term buy signal.

Last week’s market was nasty. The bad news is the JSE overall index broke a triple bottom, warning of a possible, but doubtful, down-count, to 20174. The index’s equilibrium — taken from its 2008 low — is 27758, showing it is moderately oversold. Using its 2009 low as a guide, there’s tough resistance at about 24492. The Cycle Trends future plotting promises two up-flips followed by two falls, but so far there’s no sign of a dramatic fall.

Bucking the trend with expected increased profits, Imperial gave a buy signal on high volume. Imperial’s count is to R112. Foschini gave a buy signal and has a count to R74. Mr Price reached a new high last week and gave a new buy signal. Although its R45 count is uncertain, with Mr Price’s record, it may well reach there. There’s a new buy signal for Truworths as it rushes towards its record high of R46,41.

•Even More Charting for Profits, Jean Temkin’s latest (3rd) textbook on technical analysis, is now available. She has interests in Imperial.