We are entering the weakest two months of the year seasonally for the stock market, August and September.

“In the very near term, we are cautious about prices, especially in September and October, when the seasonality of crude and product demand turns bearish,” Michael Wittner, chief oil analyst at Société Générale , wrote in a report.

Yes oil prices have risen some 12 percent in July. That is a big improvement over the 22 percent drop since the start of the year to July 1. But, we noted weakness in the energy service shares in last week’s column. And now energy shares are weak across the board. What’s going on?

We are entering the weakest two months of the year seasonally for the stock market, August and September. Already the Transports are selling off as is the Russell 2000. Dow 22,000 was propelled by a handful of stocks including Boeing, Apple, Facebook, and other high techs.

The parabolic rise in the DJIA has resulted in unrealistic expectations, which is to say positive social mood on boil. Apache APA is a case in point. Regular readers know this is one of our bell -weather energy leaders. It is not as though APA is not doing well, it posted revenue of $1.38 billion last quarter. But analysts were expecting $1.39 billion. It had a profit of $1.50 per share. Net income for the quarter was $572 million. Not good enough, the stock dropped $4 Thursday, some 8.35%.

Last week we also mentioned that the bullish percent measure for energy stocks was nearing an important test, would it vault over 50 percent after rising from 15%? The answer Thursday is no, it has declined to 43.75 percent. The internationals Conoco and Chevron are off. Exxon Mobil has not rallied at all during July. XOM is simply not generating enough cash to sustain operations and its dividend.

The energy ETF XLE also failed at 67, dropping hard to 65.43 Thursday. Last week I expressed concern that the Energy service ETF, which is XES, had not joined the oil price or the XLE rally. It closed up a smidge Thursday and has bounced off 14.5 twice since June.

But before you sell energy shares to buy Amazon at $986.92, the bigger picture is that markets are at a convergence of multi-year cycles. The US Dollar is apparently entering its own bear market turning down against other currencies. As our commodities are priced in US Dollars, commodity prices typically rise as the Dollar falls. The Commodity Research Bureau index as well as momentum indicators for oil prices are breaking to the upside. As noted previously oil prices have been in a bear market since the $145 top in 2008. That bear market should be ending this fall. Copper has already turned up and has been such a reliable indicator it is referred to as Dr. Copper.

Our bottom line is to expect a price low in energy and service shares over the next three months. That should bring a buying opportunity in oil prices.

Meanwhile President Trump has appointed a new Chief of Staff retired four star Marine General Kelly. Will he listen to Kelly, Tillerson, and Mattis, all with world-wide experience. My experience working for and observing well to do individuals is that it is near impossible to get them to listen to a third party. Convinced that success in one field, in this case real estate, will lend itself to any other endeavor, they remain aloof and alone.

For example, Eddie Childs the CEO of Western Company during the 1970s oil bom. His response was to hire television models wearing hot pants and hard hats declaring, ‘if you don’t have an oil well, get one, you’ll love doing business with the Western Company!’ He recorded numerous radio commercials critical of the US Administration. He began investing in theme parks. Halliburton did none of these things. Western Company was eventually sold to a competitor. I could give numerous other examples but my point is that Trump needs to start listening and learning with far less tweeting. Regarding the Russian sanctions legislation, the House voting 419-3 and the Senate 98-2 sends a massive no confidence vote on Trump from both parties. His latest Communications Director lasted a mere ten days producing a profanity laden interview within that time frame. Could there be a connection between Presidential perceptions and a weaker dollar?

Follow Dennis at http://www.themarketperspective.com