Report after report has come out detailing just how bad the economy is. But February’s Philly Fed Survey really put it into perspective. The February reading came in at -24, much worse than the expected reading of -10. It was even worse than the terrible January reading of -20.9. Take a look at the chart below from Briefing.com.
Look at the blue General Activity line. Not only is it trending downward, it is as low as it has been since February 2001. Even more troubling is the red Prices Paid indicator. It is trending upward. Take note of how back in 2000-2002, that indicator was trending down.
The combination of General Activity trending down and Prices Paid rising suggests that we are in a period of stagflation.
This means you should be adjusting your portfolio by taking money out of the market. You should not have more than 50 to 60 percent of your portfolio in equities right now. The rest should be in cash, natural resources, or fixed-income investments.
[Ed. Note: Rick Pendergraft is a professional trader and market analyst. Rick teaches investors how to read chart patterns and how to take advantage of them in his new K.I.S.S. trading program. This program is a great way to earn and learn at the same time. Learn more here.]
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