James
Dines,
The Dines Letter's
Seasonalities for August
Since
1961 there have been 22 higher Augusts, 16 lower, and one neutral.
The downers were in 1964, 1966, 1967, 1973, 1974, 1976, 1977,
1981, 1985, 1988, 1990, 1991, 1992, 1995, 1997 and 1998. The
overall percentage is bullish at 56.4%. Note that there have
been three or four downers per decade but, in spite of the "Mother
of All Bull Markets" decade, there were six in the 1990s,
so percentages are building up for more downers. If this coming
August goes down, however, we might be witnessing the start of
a reversal of this Seasonality.
According to Yale Hirsch's
Stock Trader's Almanac (6 Deer Trail, Old Tappan, NJ 07675),
the chance for market weakness is greatest in the latter part
of August. Interestingly, the three days before Labor Day, a
long holiday weekend that usually starts the last two days of
August, have been up 27 out of the last 39 years, for a 69.2%
bullish record. As a cautionary note, however, this record was
up 17 years in a row from 1961 to 1977, but from 1978 to 1999,
12 out of 22 were downers. The same source further concludes
that August gets clobbered during bear markets, except when July
gets clobbered first.
Looking, however, at
August combined with July's action, those two months were an
important turning point in every single year from 1982 to 1991,
and most recently in 1998, in most cases the high or low for
the year. Mr. Prechter of the Elliott Wave Theorist (P.O.
Box 1618, Gainsville, GA 30503) deserves credit for having discovered
this interesting Seasonality, which nonetheless seems to have
been muted since 1991 by the persistent bull market of the 1990s.
There were neither Tops nor Bottoms registered in the summers
of 91-97. Thus, something big might start when this Seasonality
finally does kick back in.
The Dines Gold Stock
Average (DIGSA) in the last 32 Augusts has risen 13 times (41%),
declined 16 times (50%), and was neutral 3 times. The Dines Silver
Stock Average (DISSA) has risen 16 and declined 15 times and
was neutral once. So, a bearish bias is seen in gold, while silver
is almost neutral. Yet, careful research also reveals that gold
shares' more-important Bottoms occurred in Nov 71, Aug 76, Jul
82, Jul 86, Sep 88, May 89, Jun 90, Nov 92, Sep 93, Dec 97, and
in Aug 98 mostly around the third or fourth quarters. This indicates
that gold stocks might be approaching another important Bottom
in this third quarter.
Editor's Note James
Dines is editor of The Dines Letter, P.O. Box 22, Belvedere,
CA 94920, 1 year, 20 issues, $195.
