The Dines Letter Seasonalities: May

By James Dines
The Dines Letter

       Stocks: The month of May used to be an inauspicious month for new buying, but it has been improving. Despite many years of rising markets, May has seen the DJI decline in 22 of the last 40 years, 55% of the time, or has proven to be the prelude to significant declines in Junes or Julys - that pave the way for the traditional "Summer Rally." Since 1965, the period 1 May to 30 Jun has been a loser 60% of the time (24 out of 40 years.) But, 13 of the 16 exceptions (81%) occurred in the last 22 years, so the period has been getting less bearish. May is the beginning month for the worst six months (1 May - 31 Oct) of the year, a bullish factor for golds since they tend to move opposite the market. The statistics were based on the Dow's average percentage change for the six-month periods from 1950-2003 as applied to an arbitrary investment portfolio of $10,000. Specifically, when compounded annually starting in 1950, buying in May and selling by Oct, a $10,000 investment was reduced to $9,682 by 2003, reflecting a loss of $318. On the other hand, buying in Nov and selling by Apr resulted in an appreciated value of $492,060, reflecting a $482,060 profit by 2003.
       Memorial Week Rally: Investors who nonetheless insist on buying might as well do so before the start of Memorial Day weekend, May 23 to May 27 this year. The DJI rose during that week 12 years in a row (from 1984-1995) - also 1999, 2000, 2003, and 2004. Downers during the Memorial Day holiday include 1996, 1997, 1998, 2001 and 2002. All told, the "memorial week rally" has come true 76% (16 of 21) of the time in the last 21 years.
       Precious Metals: Both the Dines Gold Stock Average (DIGSA) and the Dines Silver Stock Average (DISSA) have risen 20 times and declined 16 times (neutral once) in the past 37 Mays, for a slightly bullish record of 57%.
       Editor's Note: James Dines, editor of The Dines Letter, P.O. Box 22, Belvedere, CA 94920, 1 year, 17 issues, $195, since 1960, has been making recommendations to investors for over 40 years. Recommendations of The Dines Letter are based on mass psychology, technical and fundamental economics; thus studying both the company and investor behavior. Mr. Dines' insights have gained him a reputation as a well renowned, highly respected and regarded investment advisor.
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