The Dines
Letter's Seasonalities:
October, The "Bear" Killer
By James Dines, editor, The Dines Letter
It
has taken us decades to think out some of the market's deepest
and most-elusive secrets, which culminated in the 61 Dinesisms
and other principles laid out in TDL and my book Mass Psychology.
We have also always highly recommended MacKay's book Extraordinary
Popular Delusions, to be read alongside Mass Psychology,
its modern version. Some of our principles fly in the face of
the so-called "consensus" and "current wisdom".
For example, MacKay's work, and also Humphrey Neill's "Theory
of Contrary Opinion," led us toward the Dines Theory of
Positive Negativism (Dinesism #12, DITPON). Specifically, TDL
has been writing about the unusually frequent declines in Octobers,
a phenomenon of which the public first really became aware only
in the 1980s, but these days is widely bruited on business TV.
Yet, even now the Mass still has it wrong: declines end
in Octobers, which is why TDL has always called it "the
bear-killer month."
For the record, we
note that there is now not even the slightest public awareness
of Dinesism #29 (DINPIVOT) discussed in the Mass Psychology
book. The most important "rule" in the stock market
is that there are no rules. However, there are guidelines,
which is all that Dinesisms are, playing percentages like any
good poker player, better than nothing in the trackless wilderness
of hauntingly-lonely, stock-market forecasting.
1. Stocks: Since
1961, we count that Octobers have been up 24 times and down 14
(and 3 neutral). Long ago we baptized Octobers (beginning the
fourth quarter of the calendar year) as "bear killers."
The up months were very significant indeed. October has been
the turning point for thirteen bear moves: 1946, 1957, 1960,
1962, 1966, 1974, 1987, 1990, 1992, 1997, 1998, 1999, and 2000.
In the year 2000 for example the bottom on 18 Oct at 9,655 was
a classic bottom as it subsequently rose by 1,380 points through
Feb 01. Last year, the Dow bottomed on 21 Sep 01 at 8,062 and
then staged a 32% bear-market rally, just a week early of this
seasonality, perhaps due to the terrorist attack on 9/11. Further
reinforcing the likelihood of an October Bottom this year, we
have taken note that Labor Day week 2002 was a downer, therefore
a negative until about October 6th, but suggesting there might
be a buying opportunity some time this October.
2. Precious Metals:
For the past 21 years, both the Dines Gold Stock Average (DIGSA)
and Dines Silver Stock Average (DISSA) have been bearish in Octobers,
81% and 76% respectively. DIGSA was up 4 and down 17 years, while
DISSA was up 5 and down 16. Octobers are usually nearing a good
time to buy on declines, before their seasonally bullish first
quarter. Gold producers remain in Uptrends.
Editor's Note: James
Dines is editor of The Dines Letter, the hottest hand
on Wall Street, P.O. Box 22, Belvedere, CA 94920, 1 year, 17
issues, $195. Mr. Dines is offering Bull & Bear readers a
Look-See 3-Issue Trial for $59. Visit the web site at www.dinesletter.com.
