MARKET SNAPSHOT: As Goes January, So Goes The Year?

By Nick Godt

The market posted an 8.6% drop for the month, marking its worst performance on record for the month of January, and a pretty bad omen for the rest of the year, if one believes the old adage.

According to the Stock Traders Almanac's January Barometer, the month of January tends to predict the direction of the market with a 91.4% accuracy ratio, with only five major errors recorded since 1950.

The barometer, created in 1972, is based on the performance of the broad S&P 500 index.

Based on broader research from Quantitative Analysis Service, the month of January works accurately at predicting market direction 65% to 75% of the time.

"That's not an impeccable record," said Ken Tower, market strategist and senior vice president at the firm. "But, along with April, it definitely has a better track record at predicting the year than any other month in the year."

The S&P 500 index (SPX), used by most investing professionals as a gauge of the broader market, fell 8.6% for January.

This marked the worst January performance on record for the S&P, topping a 7.6% drop in January of 1970.

LATIN AMERICAN MARKETS: Brazil Finishes Lower; Mexico Edges Up But Loses For The Month

By Carla Mozee

LOS ANGELES (MarketWatch) --Brazilian shares slipped Friday, with pressure on mining giant Companhia Vale do Rio Doce following its plans for a $1.6 billion assets purchase, while Mexican shares broke through losses that followed a report that U.S. economic activity shrank to its lowest levels since the 1980's.

Brazil's Bovespa index fell 0.9% to 39,300.79.

In Sao Paulo, shares of market heavyweight Vale (RIO) fell 1.7% after Rio Tinto (RTP) said late Thursday it would sell to Vale the assets of two potash projects for $850 million and an iron ore mine in Brazil for $750 million in an all-cash deal.

Vale is the world's largest producer of iron ore, a key component for the production of steel.

The company "has appeared to pay a healthy premium, despite Rio Tinto's pressure to de-lever, and we note Vale's debt will continue to rise given aggressive dividends, capex and (now) acquisitions planned for 2009," wrote metals and mining analysts at Deutsche Bank in a note Friday.

The broker maintained its hold rating on Vale and its price target of $12 for the miner's U.S.-listed shares. Vale's New York Stock Exchange-listed shares closed down 2.2% at $14.11.

Moving the Market

[BRIEFING.COM] Sellers claimed control of the stock market for the second straight session, pushing the S&P 500 2.3% lower Friday. That left stocks down 0.7% for the week.

Stocks actually began the session with a gain after investors reacted positively to a better-than-feared GDP report. However, a closer look at the data revealed conditions are hardly sound. According to the latest data, the U.S. economy contracted at an annualized rate of 3.8% during the fourth quarter, marking the steepest drop in economic activity since 1982. The decline was less severe than the 5.5% drop that was expected, but that was largely due to an unexpected increase in inventories. Consumer spending, which accounts for roughly 70% of economic activity, remains weak as consumption expenditures dropped at a 3.5% annual rate.