By James Dines
The Dines Letter
The case for the bears has just been advanced by three of our Seasonalities. First, the January barometer is down, indicating a lower S&P 500 and DJI for 2010. Second, the 9 Dec 09 low has already been broken, a negative omen for the year. Third, with the New Orleans Saints' victory, the offbeat "Super Bowl Indicator" indicates bearishness as well.
March stocks are usually either neutral or modestly higher. In our Research Department's count of the 60 years since 1950, the Dow-Jones Industrial Average (DJI) in the month of March rose 38 times and declined 22 times. There have been fewer declines in recent years. These stats are comparable with the S&P 500 which, since 1950, ranks March as the fifth best-performing month. March, however, gets even better for the S&P 500: taking the last fifteen odd-numbered years, there were 12 risers and only 4 downers, up 3 out of 4, favorable for 2011. The count for even-numbered years was 9 up and 7 down.
Nasdaq has a below-average March rank, sixth from the bottom since 1971, with 25 ups and 14 downs.
TDL research additionally concluded that March is a pivotal month, often moving in the opposite direction from that of February, or just leveling off in preparation for a decline starting around April or May. March 1997, 2002, 2004, and 2005 exemplified this when the DJI plunged after an up February. March 2005 was particularly significant since it included the Dow's peak at 10,984.50 on 7 Mar 05 after which it plunged and then flattened for the next seven months. February and March 2006 were both up but started leveling off on 20 Mar 06 before bottoming on April 4, 2006 and June 15, 2006. March 2000, 2003, 2007, 2008, and 2009 also followed our "rule," having risen after a down February. Our 14 Mar 08 and 2 Mar 09 "Buys" capitalized on this Seasonality, seizing a rise of 1,282 points through 19 May 08 before the Dow's waterfall decline and a surge of 4,260 points in 2009. The rule did not work in 2001, with both February and March lower, confirming that no Technical Indicator works every time.
The Dines Gold Stock Average (DIGSA) rose 21 times out of the last 42 months of March, and declined 20 times, and was neutral once. The Dines Silver Stock Average (DISSA) rose 24 times out of the last 42 months of March, declined 17 times and was neutral once, for a bullish ratio of 59%.
Editor's Note: James Dines is editor of The Dines Letter, P.O. Box 22, Belvedere, CA 94920, 1 year, 14 issues, $295. www.DinesLetter.com.
