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 24 of the last 45 years, 53% of the time, and has been the prelude to significant declines in Junes or Julys that paved the way for the traditional "Summer Rally." Since 1965, the period 1 May to 30 June has been a loser 58% of the time (26 out of 45 years). But, 16 of the 19 exceptions (84%) occurred in the last 27 years, so the period has been getting less bearish. In terms of buying the broad market, 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 (by DIGROC). Based on the discovery of the six-month rule by the Stock Trader's Almanac, the updated statistics are based on the Dow's average percentage change for the six-month periods from 1950-2008.
Memorial Week Rally: Traders who want to buy anyway might as well do so in the week before Memorial Day, May 31 this year. The DJI rose during the Memorial Day week 12 years in a row (from 1984-1995) - also 1999, 2000, 2003, 2004, 2007, 2008 and 2009. Downers during the Memorial Day holiday week included 1996, 1997, 1998, 2001, 2002, 2005 and 2006. All told, the "Memorial week rally" has come true 73% of the time (19 times in the last 26 years).
Precious Metals: The Dines Gold Stock Average (DIGSA) has risen 24 times and declined 17 times (neutral once) in the past 42 Mays, for a bullish record of 59%. The Dines Silver Stock Average (DISSA) has risen 22 times and declined 19 times, somewhat bullish at 54% of the time.
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.
