"Even if the bear market bottom is not yet in place, it will most likely come a lot sooner than many now believe," says market historian and money manager Jim Stack.

In his InvesTech Market Analyst he takes a look at past recessions, the recent market action and the outlook for the stock market and the economy, as well as select energy stocks that he has upgraded.

"Surprising to most, this is already one of the longest recessions of the past 70 years. Only 1973-74 and 1981-82 were longer at 16 months.

"If the current recession were to extend through the middle of next year, it would become the longest recession since 1933. And if it were )to extend through the end of 2009, as some gloomy prognosticators are suggesting, it would then become the 2nd longest recession in over 100 years! 

"We’re not saying that is an impossibility. After all, anything is plausible when it comes to economics! But we seriously doubt that the current recession will extend through the end of next year.

"And if it were to end sometime in the first half of 2009, then it’s certainly not too late to be looking for a stock market bottom, since the stock market typically leads the economy by 6 to 9 months.

"In our opinion, the Federal Reserve and Treasury made 3 fatal mistakes in handling the economic downturn that began in 2007: 

• 1) Refusing to acknowledge a recession (and appearing like idiots for not doing so). 
• 2) Attacking the crisis with piecemeal solutions (which seemed both inept and ineffective). 
• 3) Failing to recognize the real crisis was in the public’s loss of confidence (which continued to snowball as a result).

"The NBER has now made it easier for everyone, including Ben Bernanke, to use the dreaded 'R'' word.  Note that 3 of the past 4 recessions actually ended within a month of when the NBER officials announced that 'we are now in a recession.'  So it may actually turn out to be 'good' news if the 'worst' news is now out on the table.

"Admittedly, we are not ready to step out on that limb again and say –in no uncertain terms– that the bear market bottom is in place. But ironically, we are encouraged (rather than discouraged) that a record 81% of CFOs are more pessimistic about the economy this quarter than last quarter.

"This goes hand-in-hand with a record low in Consumer Confidence 1 as measured by the Conference Board.

"Extremes in sentiment or confidence often come at critical market turning points. One reason is that when pessimism reaches such extremes, it has no where to go but up.

"And what we find intriguing about the Conference Board survey is that consumer confidence about the 'Present Situation' has continued falling, while their confidence about 'Future Expectations' has not.

"And while the Conference Board routinely reminds us that you cannot subtract apples from oranges, similar upturns have proven prescient at leading the path out of recession in the past.

"Moreover, we feel our portfolios are well positioned to weather the uncertainty ahead, and yet take advantage of any profit opportunity. After all, even if the bear market bottom is not yet in place, it will come… and most likely a lot sooner than many of the doom-and-gloom bears currently believe.

"Due to the recent pullback in oil prices and energy stocks, EnCana (NYSE: ECA) and Devon (NYSE: DVN) have been upgraded from “Hold” status to 'Buy/Hold'.

"Investors who have not yet initiated positions in these equities may consider doing so now. If you are adding new money into the market, we suggest cautiously phasing your portfolio up to our recommended allocation over several weeks."