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Monday, February 02, 2009

Will January Haunt Us?

The babbling heads are atwittter with the terrible statistics on January — the Dow closed down 8.8% for the month and the S&P dropped 8.75%. And if you measure from January 2nd (first trading day of the New Year) and not December 31st, the Dow dropped 11.4% and the S&P 500 shed 11.3%.

The Wall Street standard is that if the S&P falls in January then it will fall for the rest of the year. Since 1969 this trend has been repeated 32 of a possible 39 times.

Other statistics:

Dow Jones Industrial Average: Since 1897, the Dow ’s full year has followed its January direction 72.3% of the time.

S&P 500: Since 1929, the S&P’s full year performance has followed January 76.3% of the time.

Nasdaq: Since 1970, the Nasdaq’s full year moves in the same direction as January 75.7% of the time.

The logic behind this is simple. Traders have a nose for trouble and they start selling a bad year early.

Hey, you know what had a good January? Gold ended the month up 5.2%, despite the fact that it closed down as much as 8% on January 14th.

Today gold is down about $10 as I write this, but holding support at $900. Will it continue to hold support? Stay tuned.

Here is some other news of interest …

Natural Gas Glut Could Hit U.S. As many as seven massive natural gas export terminals are expected to start up overseas this year, expanding worldwide capacity by 20 percent and flooding markets with new supplies of the key power plant and heating fuel. Dozens of new tankers capable of carrying natural gas in a liquefied form are slated to hit the seas. Just as these new supplies come on line, worldwide demand is expected to drop as the global recession deepens.

Wind turbine firms feel downturn’s pinch Last summer, wind turbine manufacturers couldn’t make parts fast enough to meet demand. Now, industry executives say, financing has all but disappeared because of the economy, causing some planned projects to be put on hold. Unless there’s a robust economic rebound, or the government steps in, they say, construction of wind turbines nationwide will be set back, and the companies that make turbine parts could be forced to cut jobs.

Zimbabwe Removes 12 Zeroes From Currency in Bid to Quell Black Market Zimbabwe, which has the world’s highest inflation rate, slashed 12 zeroes off its currency and announced measures to make trade in foreign exchange more transparent, Gideon Gono, the central bank governor, said.

Investment Planned for Australia Drops to $392 Billion as Miners Pull Back Planned investment in Australia dropped for the first time in four years as mining companies scaled back production because of the global economic slowdown, Access Economics said.

2008 Was Worst for Consumer Spending in 47 Years A Commerce Department report showed spending by individuals fell 1% last month, after dropping a revised 0.8% in November. Economists surveyed by had forecast a 0.9% drop.
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