TDL's
Seasonalities: August
By James Dines, editor
The Dines Letter
Since
1961 there have been 23 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 59%. 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.
In fact, taking the
Dow and S&P 500 back to 1950, August's monthly performance
ranks second worst, averaging a minus, 5.1% and 0.11%,
rate of change respectively.
However, in spite of
August's relative weakness, traders might fund trading opportunities
during the last three days before Labor Day, a long holiday weekend,
as the Dow has been up 28 out of 40 years for a 70% bullish record.
Labor Day this year falls on September 3rd.
Examining 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 from 1998-2000, in most cases the high or low for the
year. Mr. Robert Prechter of the Elliott Wave Theorist
(PO Box 1618, Gainesville, 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. In 1998 the July-August decline led
to a Sep 1 bottom and an important TDL "Buy" on 8 Sep
98. In '99, the 24 Aug Top was important enough to have preceded
a 1,470-point drop to a bottom on 16 Oct. And in 2000 the July
rally led to the 6 Sep Top.
The Dine Gold Stock
Average (DIGSA) in the last 33 Augusts has risen 14 times (47%),
declined 16 times (53%), and was neutral 3 times. The Dines Silver
Stock Average (DISSA) has risen 17 (53%), declined 15 times (47%)
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 stock might be approaching another important
Bottom before Christmas.
Editor's Note: James
Dines is editor of The Dines Letter, P.O. Box 22, Belvedere,
CA 94920, 1 year, 17 issues, $195. Visit the Web site at www.dinesletter.com.
