TDL's Seasonalities: August
by James Dines
The Dines Letter
Since
1961 there have been 24 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 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&P500 back to 1950, instead of 1961, August's monthly
performance ranks third worst, averaging minus 0.1% and minus
0.02% rates of change respectively.
However, in spite of
August's relative weakness, traders might consider trading opportunities
during the last three days before Labor Day, a long holiday weekend,
as the Dow has been up 30 out of the last 42 years, for a 71%
bullish track record. Labor Day this year falls on September
1st.
Examining August combined
with July's action, those two months were an important turning
point in every single year from 1982 to 1990, and from 1998-2002,
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 "Mother
of All Bull Markets" of the 1990s. There were neither Tops
nor 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 99. In 2000 the July rally led to the 6
Sep Top. Last year's 24 July bottom at 7,433 might be an important
Bottom.
B. The Dines Gold
Stock Average (DIGSA) in the last 35 Augusts has risen 16
times, declined 16 times, and was neutral 3 times. The Dines
Silver Stock Average (DISSA) has risen 19 (56%), declined 15
times (44%) and was neutral once. So, gold is neutral while silver
is slightly bullish. 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,
Aug 98, Jul 99, Oct 00, Nov 01 and Aug 02- mostly around the
third or fourth quarters. This indicates that gold stocks might
be approaching another important Bottom within the next few months.
Editor's Note: James
Dines is editor of The Dines Letter, P.O. Box 22, Belverdere,
CA 94920, 1 year, 17 issues, $195. www.dinesletter.com.
