The Dines Letter’s Seasonalities: August

By James Dines
The Dine’s Letter

       Since 1950 there have been 35 higher Augusts and 26 lower, up 57% of the time, bullish. Short-term traders might consider the positive percentages during the last three days before Labor Day, an American holiday weekend, as the Dow has been up 37 of the last 50 years, for a whopping 74% bullish track record. Labor Day this year falls on September 5th, so odds favor a market rally between Aug. 31 and Sep. 2.
       August combined with July’s action marked important turning points in every single year from 1982 to 1990 although there were neither Tops nor Bottoms in the summers of 91 – 97 (perhaps due to our call for the “Mother of All Bull Markets” in the 1990s), but 1998-2007 did include the high or low for the year in many cases. In 2008, 15 August marked the final Top before the Dow’s waterfall decline in the bear market. In July 2009 and 2010, the Dow endured significant declines of 9% and 15% respectively prior to its subsequent high at 12,876 on 2 May 2011. So something important might again begin this summer.
       The Dines Gold Stock Average (DIGSA) in the last 43 Augusts rose 22 times, declined 18 times, and was neutral three times, scarcely bullish at 55%. The Dines Silver Stock Average (DISSA) rose 24 times (57%), declined 18 times (43%) and was neutral once. So, gold’s and silver’s percentages are also slightly bullish. Yet, based on DIGSA, 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, Jul 01, Jul 02, Aug 07, Oct 08 and most recently Jan 10 – mostly around the third but also fourth quarters. This suggests that gold and silver stocks might be approaching another important Bottom in coming months – perhaps in August.
       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.