By James Dines
The Dines Letter
Stocks: Since 1950 the Dow-Jones Industrial Average (DJI) has had 23 rising Septembers and 37 downers, a bearish bias. Taking both the S&P 500 and the DJI back 60 years, Septembers had more monthly declines than any other month of the year. September has been Nasdaq's worst month since 1971.
Moreover, five of the last 10 bear markets (half) started in the third quarter: 21 September 1976, 8 September 1978, 25 August 1987, 17 July 1990, and 17 July 1998. Further skewing the bearishness of September in the preponderance of double-digit S&P 500 declines in the second and third quarters of mid-term election years. There have been only 16 double-digit declines in the past 244 quarters, and seven out of the 16 were in the second and third quarters of mid-term election years. In this year's second quarter the S&P 500 is already down 11.9%. Will lightning strike twice - with another double-digit decline in the third quarter? Before we rule that out however, note that it has occurred as recently as 2002.
Labor Day: If the market declines in the four-day week following Labor Day (starting and including Tuesday, September 7 this year and ending on Friday, September 10), one should postpone buying for one month. It worked splendidly in 1994, 1998, 1999, 2000, 2001, 2002 and 2008, when postponed buying provided buyers with prices near a Bottom in all seven Octobers.
One the other hand, if there is a gain in that four-day week, the market will probably keep going higher, true in 1993, 1995, 1996, 1997, 2003, 2005 and 2009 when the market posted a gain in the week after Labor Day and continued to rise in subsequent months. This did not work however in 2004, 2006 and 2007. No Indicator works every time, but those are the latest odds.
Golds: Septembers are favorable for gold shares, as measured by DIGSA (the Dines Gold Stock Average). Since 1968 there have been 24 ups (59%), 17 downs (41%), and one neutral. Silver shares in DISSA, the Dines Silver Stock Average, have been only slightly bullish the last 29 Septembers, with 16 up (55%) and 13 down, so odds favor it being a good time to buy silvers on weakness. The fourth-quarter is often a good time to start accumulating precious-metals shares in anticipation of the positive Seasonalities for the first quarter, when gold and silver shares usually rise, by Dinesism #9: by the Dines Rule of Gold Seasonality (DIRGS).
Editor's Note: James Dines is editor of The Dines Letter, P.O. Box 22, Belvedere, CA 94920, 1 year, 14 issues, $295.
The Dines Letter is one of the best-known and oldest stock-market newsletters of its type in the world. Basing its recommendations on Mass Psychology, Technical Analysis and Fundamental Economics, The Dines Letter offers explicit advice on stocks, gold and silver stocks, commodities, currencies, the economy and the overall international outlook.
Goldbug! Originally published as The Invisible Crash, the newly updated Goldbug! book written by Mr. Dines, "The Original Goldbug" himself is the third and final edition. The original book was Mr. Dines' seminal thesis on gold, currencies, deflation and inflation, the function of money in society, and a narrative with both historical perspective and considerations for the future path toward a stable world currency system. Goldbug! can be ordered by calling the order desk at 1-800-84-LUCKY or from the website, www.dinesletter.com.
