By James Dines
The Dines Letter
Stocks: Since 1950 the Dow-Jones Industrial Average (DJI) has had 24 rising Septembers and 37 downers, a bearish bias. Taking both the S&P 500 and the DJI back 61 years, Septembers had more monthly declines than any other month of the year. Additionally September has been Nasdaq’s worst month since 1971.
Moreover, five of the last 10 bear markets (half!) started in the third quarter: 21 Sep 1976, 8 Sep 1978, 25 Aug 1987, 17 Jul 1990, and 17 Jul 1998. Perhaps the sixth will have started in July 2011. Further underlining September’s bearishness is the preponderance of the DJI’s double-digit declines in the third quarter, totaling four out of eight since 1986. Third quarters also account for five of the 10 worst quarters in the DJI since 1950, including 1974, 2002, 2001, 1990 and 1981, as ranked by the percentage change from largest to smallest.
Labor Day: If the market declines in the four-day week following Labor Day (starting and including Tuesday, September 6 this year, and ending on Friday, September 9), one should postpone buying for one month. This percentage worked splendidly in 1994, 1998, 1999, 2000, 2001, 2002 and 2008, wherein buyers bought near a Bottom in all seven Octobers.
On 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, 2009, and 2010, 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 25 ups (60%), 17 downs (40%) and one neutral. Silver shares in DISSA, the Dines Silver Stock Average, have been only slightly bullish the last 30 Septembers, with 17 up (57%) and 13 down (43%), so odds favor it being a good time to buy silvers on weakness. The fourth-quarter is often a favorable time to start Accumulating precious-metals shares in anticipation of the positive Seasonalities of the first quarter, when gold and silver shares usually rise, by Dinesism #9, the Dines Rules 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. www.DinesLetter.com.
