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.

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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.]

Inspired by his high school economics teacher, Rick Pendergraft fell in love with the markets at an early age. He entered his first investing competition at 17, and opened his first brokerage account before he finished college. At the age of 23, on the third options trade he had ever placed, Rick turned $1,800 into $22,000 in less than a week, when the company he bought became the target of a takeover. He admits it was a stroke of luck, but it was a memorable education as to the leverage that options can provide.
After a ten year career in banking, Rick decided to pursue trading full-time. To get his foot in the door, he started out in the sales department at Schaeffer’s Investment Research. It was not long before his talent was recognized and he was invited to apprentice under Bernie Schaeffer, one of the top options traders in the world. Rick thrived in his new position and twice received the award for “Top Trader.”Rick has developed a loyal following of readers who are grateful for his timely warnings and profitable advice. He is widely recognized as a market expert and has been frequently quoted by Reuters, BusinessWeek, Forbes, USA Today, the New York Times, and the Washington Post. Rick’s primary focus is on identifying short and intermediate term rising and falling trends in the major market sectors. His analysis is based on technical factors along with indicators of market sentimentRick lives near Delray Beach, FL with his wife and three children.