While market bottoms happen on a day, they are not made in a day. Stock market bottoms are defined by a process of price discovery that often takes place over the months surrounding the actual low point. Further evidence in the market’s behavior last week suggests a bottoming process is underway, but it does not shed much light on when it may be over.

Friday’s stock market gain despite the release of the November employment report, which showed the worst monthly job loss in decades, reflects the degree to which a severe recession has already been priced into the markets.

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