James Dines ” Trade the Positive Percentages coming right Up

Posted by James Dines - The Dines Letter

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Since 1950 there have been 35 higher Augusts and 25 lower, up 58% of the time, bullish. Short-term traders might consider trading the positive percentages during the last three days before Labor Day, a long holiday weekend, as the Dow has been up 36 of the last 49 years, for a 73% bullish track record. Labor Day this year falls on September 6th, so Sep 1-3 should be bullish.

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 “Mother of All Bull Markets” in the 1990s) but 1998 – 2007 included the high or low for the year in many cases. In 2008, 15 Aug marked the final Top Before the Dow’s Waterfall Decline in the bear market. In July 2009, the Dow endured the last significant decline prior to a 3,171 point rise that lasted until 26 April 2010. So something important might again begin this summer.

The Dines Gold Stock Average (DIGSA) in the last 42 Augusts rose 21 times, declines 18 times, and was neutral three times, scarcely bullish at 54%. The Dines Silver Stock Average (DISSA) rose 23 times (56%), declined 18 times (44%) and was neutral once. So, gold 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, and recently, Nov 08 – mostly around the third but also fourth quarters. This suggests that gold and silver stocks might be approaching another important Bottom in the coming months – perhaps in August.

James Dines is editor of The Dines Letter, P.O. Box 22, Belvedere, CA 94920, 1 year, 14 issues, $295. For a limited time, the subscription includes two FREE Special Reports. For details visit www.dinesletter.com.