It's official: January s 8.6% decline in the S&P 500 was the worst ever for that month.

Feeling better? Let s put that into some perspective. December was actually a pretty good month, so markets still haven t dropped below their Nov. 21 lows. It s also hard to believe that the rest of 2009 will be as bad as January.

Moreover, steep drops often yield buying opportunities. The Nasdaq Composite has dropped through my latest buying threshold of 1485 at least three times in recent weeks, including last week.

So while everyone is fretting about the details of Obama s proposed economic stimulus package, the likelihood of a bank rescue package and Wall Street s bonuses, I recommend dusting off your shopping list, especially if you haven t already bought at these recently-reduced prices.

Shopping is the operative word, since my interest has shifted to the retail sector for the first time in months, piqued by Amazon.com (AMZN) amazing earnings report last week. Bucking the dismal trend reported by nearly every other retailer, Amazon unveiled robust profit and revenue numbers that, by the looks of them, would never indicate that we're in a recession.

I wish I d seen this coming. Amazon had already boasted that it was having its best holiday season ever. Its shares were trading at about $50 before the earnings release, and they ve been on a tear since, selling this week for $62 -- a more than 20% gain. This may no longer qualify as a bargain, but it s still a big discount to the $88 Amazon shares fetched as recently as August.

Can Amazon keep up its remarkable growth, even in the face of a deepening recession? The evidence suggests it can. Its Amazon Prime program, which offers unlimited free shipping to customers who pay an annual fee, seems to be working brilliantly at erecting a competitive barrier (don t tell the new Obama antitrust investigators). I m a member, and I automatically turn to Amazon as a result. Given Amazon s healthy margins, it s finally realizing significant economies of scale. And without the overhead of a big bricks-and-mortar chain, it seems to be emerging as the low-cost destination for price-conscious consumers, which these days is pretty much everybody. That s without even considering the runaway success of the Kindle, which may well signal the death knell for the hardcover book. And I have to hand it to the company for its mastery of the less glamorous but all-important dimensions of customer service.

As an investor, I hate to chase results. But given the overall depressed state of the market, I d make an exception for Amazon. One of these days it will hit a new 52-week high, which will be a solid 50% gain from current levels.

Of course, what s good news for Amazon is grim news for traditional retailers, who have all the costs associated with actual stores. I suspect the Internet is in the process of doing to them what it s already doing to newspapers, which is to drive them into bankruptcy. Circuit City is already in liquidation. I know plenty of consumers, especially young ones, who enjoy browsing merchandise at the mall, who then return home to shop for those goods on Amazon. It s pointless to warn that eventually there won t be any malls. So as an investor, I m continuing to shun all traditional retailers (as well as retail-oriented real estate).

That leaves what may prove to be Amazon s only viable competitor: eBay (EBAY) . The online auctioneer has a raft of problems, including its bewildering purchase of telephone service Skype, a move I denounced at the time. It has been a disappointment in recent years. But eBay still has its quasi-monopoly on the auction business, which even in decline gives it a dedicated consumer base. Its PayPal online-payment operation is healthy. And there s no reason it can t eventually compete with Amazon as a broad Internet retailer, although anecdotal reports suggest it has plenty to learn about customer service and execution.

In comparison, however, eBay is cheap: a forward price-to-earnings ratio of under 10, compared to Amazon s 40, which is why I still own eBay shares. Once consumer spending revives, both Amazon and eBay should rally.