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January is a loser for stocks, but ‘correction’ still eludes Wall St.

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Investors who’ve been waiting to buy stocks for less are getting their chance -- but the discounts so far are bigger overseas than in the U.S.

And the bears, naturally, think the discounts soon will get more substantial everywhere.

As Wall Street heads into the final trading day of January, major U.S. stock indexes are off about 6% from their recent peaks.

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The Standard & Poor’s 500, which slid 1.2% on Thursday, is down 5.7% from its 15-month closing high set on Jan. 19.

That’s still well shy of the minimum 10% decline that would mark a classic “correction.” We haven’t had a drop of that magnitude since the market rally began in March. Every sell-off along the way has been minor -- and short-lived.

Of course, some stocks already are off much more than 10%. Heavy machinery giant Caterpillar Inc., which this week sounded a relatively cautious note about 2010, has tumbled 19% since Jan. 11.

Investors also have been cashing in some chips in the tech industry, Wall Street’s best-performing sector of last year. Google Inc.’s shares are down nearly 15% since Jan. 4.

John Taylor, chief investment officer at New York-based FX Concepts, the biggest foreign-exchange hedge fund, is telling clients that the global economic recovery has run out of steam -- which he thinks is just beginning to show up in falling stock prices.

In the U.S., with the recovery “so tied to government handouts and excessive liquidity,” Taylor believes that a double-dip recession is a certainty as the Obama administration now preaches fiscal restraint and as the Federal Reserve remains committed to phasing out its special lending programs.

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Overseas, he points to China’s efforts to rein-in bank lending, and to the growing fiscal woes of what he dubs Europe’s “subprime” states, particularly Greece -- where the stock market now is off 31% from its 2009 high reached in November.

U.S. investors looking for more proof of the recovery’s sustainability will get a key report today, when the government reports on fourth-quarter gross domestic product growth. The economy is expected to have expanded at a real annualized rate of nearly 5% in the three months.

Stock bulls are betting that the bears, once again, are underestimating the economy -- and investors’ willingness to buy into modest sell-offs.

“The various indicators that we follow still suggest that this will just be a correction, and not the start of a new bear market,” Paul Hickey, co-founder of market research firm Bespoke Investment Group in Harrison, N.Y., said in a note Thursday. “With the news quieting down in Washington, the focus will eventually turn back to earnings and economic indicators, and both still look fine.”

For whatever reasons, the U.S. market has been holding up better than many foreign markets. Through Thursday stocks were down 7.9% in India, 8.4% in Germany and 11.3% in Hong Kong, all measured from their recent peaks. Asian markets were broadly lower again on Friday.

But note: Over the last year, foreign stocks have mostly followed the U.S. market trend, not led it. At this point, they probably don’t have a message for Wall Street so much as they’re looking for a message from Wall Street.

-- Tom Petruno

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