The end is coming to what has been a historic week and no doubt many investors can t wait for Happy Hour. Throughout a shortened trading week, an $800 billion stimulus bill, a $75 billion homeowner plan, auto makers viability proposals and the continuation of a dismal earnings season all weighed heavily on stocks. Even something as innocuous as it simply being Friday seems to be enough to tip the market into the red. Indeed, stocks dropped more than 100 points soon after the open.

It s easy to point to some of the government plans as the catalyst that helped the Dow Jones Industrial Average break through its 52-week low on Thursday. Ed Yardeni, president of Yardeni Research, told clients Thursday: "The Obama administration is cramming so many rescue plans into the economy at such a fast pace that it is hard to assess their likely impact, let alone keep track of them."

But what about this Friday thing? Turns out there might be something to the way stocks react to the day of the week. And a bad end to the trading week may actually portend more pain on Monday.

On average Mondays produce negative stock returns as it is. But if the market tanks on a Friday, there's an 80% chance it will drop 72 hours later, too, according to a 2000 research paper published in the Journal of Financial and Quantitative Analysis. (If the market rises on a Friday it tends to gain on Monday.) That phenomenon was magnified last September when investors endured a dismal Friday only to come back from the weekend to find some of the world s biggest financial players teetering on the brink of disaster.

Investors should be treading carefully. Bottoming is a process and there s no way to know if you ll catch a falling knife by the handle or the blade. Consider that the last time the Dow traded at these levels it quickly went on a quietly amazing run, rallying nearly 20% from late November to early January.

Unfortunately, it's tough to have conviction that we'll get a reprise of that action anytime soon. The problem with such historical comparisons is that we are in totally uncharted territory, says Joe Clark, managing partner of Financial Enhancement Group, a financial planner in Anderson, Ind. Not only are we in the midst of the worst global economic crisis since the Great Depression, but massive rolling government intervention adds a colossal wild card into the mix.

And it's not as if things are going better overseas. Just this week we learned that Japan, the world's second-largest economy, dived off a cliff in the fourth quarter. Perhaps even more alarming, Moody's Investors Services may have to downgrade a number of major Western European money centers with exposure to the crumbling economies of Eastern Europe. As Robert Brusca, chief economist at Fact & Opinion Economics told us: "That potentially puts a whole new asset class in the toilet."

It seems investors have almost come to expect bad news. With the global equity markets hitting new multiyear lows daily, investors are acting like a condemned criminal about to step onto the gallows, says James Herrell, director of investments at Partnervest Financial Group. There is an air of resignation about the economy and the market. They expect bad news daily. Human psychology is such that we tend to project recent experiences into the future.

And as much as the Dow stands for the market in the popular mind, the true proxy is the S&P 500. By that much broader measure the market is still above its 52-week low and still has some room to maneuver on the downside. Technical support on the S&P is 752, Clark says, and -- technically at least -- the closer you get to that level the more you should be buying, hoping to catch stocks cheap on the bounce.

So how should investors position themselves as the weekend approaches? We ve noted before that buy-and-hold doesn t much work in a sideways market. As Keith McCullough, chief executive and chief investment officer at Research Edge, a New Haven, Conn., investment research outfit, told clients Friday morning: The next bull market does not cometh -- this is a market that needs to be traded.

Herrell at Partnervest agrees with that take. Investors should be deploying cash, not hoarding it, he says. Furthermore, although volatility has come down from the stratosphere, it is still high by historical standards. It is possible to harness volatility and use it to both generate returns and reduce risk in a portfolio, all the while still allowing for participation in a market recovery, when it occurs, without having to resort to timing the market.

After all, as Herrell notes, by the time a recovery is evident, prices may be a lot higher. So once again, bear-market rules apply: Don t panic; don t sell into a decline. Preserve capital. Take profits where you can and, most important, maintain discipline. As our own James B. Stewart has made clear, sticking to a system in bad times really does pay off.