TDL's
Seasonalities:
July and the "Traditional Summer Rally"?
by James Dines, editor
The Dines Letter
A.
Some define the "traditional Summer Rally" as any advance
of at least 5% from the low established in May or June, to the
high reached during the third quarter. On this very liberal basis,
35 of the past 42 summers, or 83% of the time, have enjoyed a
rally. Other Analysts have tightened this definition to a "net
gain from May 31 to Aug 31," which comes out to 60% (25
of the 42 years), still not overly useful.
Contrarily, our Research
Department has been tracking this closely over the years and,
taking July as a month, the actual record since 1961 has not
been as encouraging as the legend. We count the last 42 Julys
as 22 positive (55%) and 18 (45%) negative (two neutral) so there
is no clear July Seasonality.
Then our hard-working
Research Department experimented with something new. They counted
up the number of times the month of June was down (24) in the
last 42 years, and discovered that their subsequent Julys were
up 16 times and down 8 times, thus indicating that declining
Junes led to rising Julys twice as often! A down June increases
favorable odds for a bullish July! Curiously, Research discovered
no corresponding Seasonality for rising Junes having favored
declining Julys. Therefore, since this June 2003 looks higher
we will not be getting any clues from this Seasonality, but we
will return to our discovery in June 2004.
Then our Research Department
tallied the DJI's closing price for the five days before the
4th of July holiday as compared with the DJI close five days
after the 4th of July: in the 42 Julys from 1961 to 2002, the
DJI's net percentage gain for that 10-day period was positive
27 times. The 27 positive results (64%) in any case are more
bullish for these 5 days than the record for the whole-month
period (which is 55%, as indicated above). The foregoing suggests
that, if there is a rally, seasonal percentages favor strength
in early July and then less of a gain later in July.
B. Gold and Silvers:
The Dines Gold Stock Average (DIGSA) in the last 35 Julys has
risen 14 times, declined 20 times and was neutral once, for a
bearish outlook 59% of the time. The Dines Silver Stock Average
(DISSA) has risen 18 times and declined 17 times, for a neutral
seasonality.
Editor's Note: James
Dines is editor of The Dines Letter, P.O. Box 22, Belvedere,
CA 94920, 1 year, 17 issues, $195. www.dinesletter.com.
