TIMES ARE UGLY. THEY WILL likely get uglier.

Reflecting that, the stock market posted its worst weekly performance since the third week of November, a period that many believe marked the lows for this bear market.

The Dow Jones Industrial Average lost 143.28 points Friday, bringing the weekly loss to 435.51 points, or 4.82%, to 8599.18, still well above its Nov. 21 intraday low of 7449.38. The Nasdaq Composite ended down 60.62 points for the week, or 3.71%, at 1571.59, versus its Nov. 21 low of 1295.48.

Job losses reported last week by the government for December reached 524,000, marking the twelfth straight month of declines. Including groups such as agricultural and self-employed workers, a separate survey of households painted an even grimmer payroll picture, putting December job losses at 806,000. The unemployment rate soared to 7.2%, a level not seen since 1993. That is likely to worsen as job trends lag economic trends. Temporary jobs, a leading indicator of employment trends, declined for the 23rd time in 24 months.

Retailers, meanwhile, reported that sales fell off a cliff in December amid the worst holiday-shopping season since data first was collected in 1970. Not even the world's largest retailer, Wal-Mart Stores (ticker: WMT), escaped unscathed: Its December sales came in well under expectations and it cut its profit outlook for the fourth-quarter as a result.

The outlook for corporate profits gets weaker by the day and no industries are spared: Chevron (CVX), Intel (INTC), Bank of America (BAC) and Best Buy (BBY) were among those issuing profit warnings last week. House sales are hitting new lows. And more fraud emerged in the form of Indian outsourcing giant Satyam Computer Services, whose chairman and co-founder, Ramalinga Raju, admitted last week to inflating earnings and assets for years.

What's keeping investors on edge now is the uncertainty about how long the economic contraction will continue and what depths it might fall.

All the monetary easing in the world — with interest rates in the U.S. at zero and the Bank of England last week reducing rates to the lowest levels in its 315-year history — isn't translating into meaningful borrowing by consumers. In fact, U.S. consumer borrowing fell by $7.6 billion in November, the biggest drop in the 65 years that the measure has been tracked.

One economist points out, "in order for the economic contraction to ease meaningfully, a resumption of some credit growth (or sufficient government spending) will have to take place." But, he added, the government spending plan won't come soon enough and won't be of a magnitude to offset the decline in private consumption.

THE DOW'S 15% BOUNCE since Nov. 21 certainly has restored some faith, but at what point does confidence become complacency?

The line separating the two is worth watching in this easily-spooked market. Already, the short-term risk forecast, as measured by the VIX volatility index, has relaxed very swiftly from a late-November high near 81 to about 38 recently, and bullish call-buying has increased.

All these bounces are fueled by the hope that the government stimuli and easing mortgage rates will help restart the economy. Still, the road to recovery is neither smooth nor straight, and in this uncertain market, a willingness to take profits — now that we have some — is a virtue (Source: Barrons On-Line).