The Dines
Letter's
Seasonalities for August
By James Dines, editor
The Dines Letter
A.
Since 1961 there have been 23 higher Augusts, 17 lower, and
one neutral. The downers were in 1964, 1966, 1967, 1973, 1974,
1976, 1977, 1981, 1985, 1988, 1990, 1991, 1992, 1995, 1997, 1998,
and 2001. The overall percentage is bullish at 58%. 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 0.19% and 0.39%
rate of change respectively.
However, in spite of
August's relative weakness, traders might find trading opportunities
during the last three days before Labor Day, a long holiday weekend,
as the Dow has been up 28 out of 41 years for a 68% bullish track
record. Labor Day this year falls on September 2nd.
Examining August
combined with July's action, those two months were an important
turning point in every single year from 1982 to 1990 and most
recently from 1998-2001, in most cases the high or low for the
year. Mr. Prechter of the Elliott Wave Theorist (PO
Box 1618, Gainesville, GA 30503) deserves credit for having discovered
this interesting Seasonality, which nonetheless was muted from
1991-97, perhaps by the persistent bull market of the 1990s.
There were neither Tops or Bottoms registered in the summers
of 91-97. In 1998 and 2001 the July-August decline led to Sep
1 and Sep 21 bottoms and an important TDL "Buy" on
8 Sep 98. In 1999, 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.
B. The Dines
Gold Stock Average (DIGSA) in the last 34 Augusts has risen 15
times (48%), declined 16 times (52%), and was neutral 3 times.
The Dines Silver Stock Average (DISSA) has risen 18 (55%), declined
15 times (45%) and was neutral once. So, a slightly 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 within the next few months."
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