Tortoise-like start not bad for stocks -- yet

Here's the statistical skinny on whether a bad start to the year for the stock market means trouble ahead for investors:

A bad opening day in the stock market doesn't have to ruin the year on Wall Street.

Nor does a negative return in the first week (or first five days) of the year necessarily spell doom.

But the odds that stocks could be in for a rocky year rise, history shows, if U.S. stocks decline on the first day of the year, the first week of the year and the first month of the year.

That's the takeaway from data compiled by Robert Sluymer, an analyst at RBC Capital Markets. His analysis gives investors, smarting from the market's lousy start to the 2016, some hope -- as well as some reasons for concern. The Dow Jones industrial average kicked off the year Monday with its worst opening day drop since 2008 and the Standard & Poor's 500 stock index suffered its worst first day of trading in 15 years. After a brief respite Tuesday, stocks swooned anew Wednesday, with the Dow down about 300 points in late-day trading.

The slow start got the Wall Street worry machine buzzing. January, of course, kicks off a new year, and often -- although not always -- sets either a bullish or bearish tone for the rest of the year.

First, let's address a potential red flag: When all three of the so-called "trifecta" of January seasonal indicators point in the same dreary down direction, the odds of the year turning out to be a dud, too, rise dramatically, RBC's analysis shows. In fact, the Dow has finished the year in the red 79% of the time since 1901 when it suffered losses on the first day, first week and first month of trading. As a point of comparison, Sluymer points out that the Dow has finished up 64% of the time in all years since 1901.

The good news is there's plenty of time for stocks to shrug off their early-year malaise. The bulk of the selling this year has been related to fears surrounding mainland China's latest stock market plunge and renewed worries about the state of the global economy following downbeat manufacturing data out of China and the U.S. on the first business day of 2016. North Korea's contention on Wednesday that it successfully tested a high-powered nucler bomb has added to the skittishness.

Seasonality matters, but business conditions matter more, when it comes to divining the next move of stocks, says Tim Dreiling, regional investment director at U.S. Bank's Private Client Reserve.

"Does the first trading day portend good things or bad things? Fundametally no," he tells USA Today. "Investors have to think with rational minds. We still have to pay attention to earnings. We still have to pay attention to company sales and revenue and how companies are performing."

(Still, first day of the year drops of more than 1% for the S&P 500 back in the bear markets of 2001 and 2008 were a bad omen, with the market falling 10.5% the rest of the year in 2001 and nearly 38% in 2008, according to Bespoke Investent Group.)

That said, if January can finish up, there's better odds of the market finishing higher for the year. If the month finishes lower, the odds of a decline rise.

Indeed, there's and old saying on Wall Street coined by The Stock Trader's Almanac that says, "As the S&P 500 goes in January, so goes the year."

And the record of the so-called January Barometer has been stellar, according to editor Jeffrey Hirsch, who is cautious on the market this year as negatives continue to pile up.

"The long-term record has been stupendous, an 87.7% accuracy rate, with only eight major errors in 65 years," he says. "The market’s position on January 29 (the last day of trading this month) will give us a good read on the year to come."

Adds Hirsch: "January matters. "January is the gateway of the year and what happens in January, by nature, is like a microcosm of the year. It's also the time of year when forecasts are made, and capital is reallocated for the new year."