There’s no doubt about it: Things are shaping up to be economically and politically supercharged. President Bush will give his annual “State of the Union” address on Monday, and his aides say he’s expected to “sketch out how he sees the U.S. economy today and principles for how we should keep the economy going.”

As we all stay tuned, investors everywhere are grappling with recession fears that now seem like fact. Now, they say a zebra can’t change its stripes—and that may be true—but I’ll tell you that a bull can retract its horns. Consumers are spending less, unemployment is rising, and unfortunately, the Fed 0.75 percent slash in the lending rate may simply be too little too late.

Now, I maybe striking fear in the hearts and portfolios of many out there, but occasionally a healthy dose of fear with a solid game plan does a portfolio some good.  As much as I hate to say it, the United States has entered an economic recession and a bear market for stocks.

Please believe me when I say that I did not come to this conclusion lightly. But when the economic data change, investors might have to change their outlook. Here’s what the ChangeWave Alliance, a research network of 13,000 highly qualified business, technology and medical professionals in leading companies in select sectors recently unveiled about the receding tide of the economy.

The Perfect Recipe for a Recession

ChangeWave Alliance research shows the decline in spending growth during the next 90 days occurring across all income levels, even among “super-spenders”—those who earn more than $150,000 per year.
Now, that’s particularly troubling because when the “super-spenders” (they account for 80% of discretionary spending in the U.S.) aren’t spending—no one else is going to either. Take a look for yourself:
 
The end result? Super-spenders (a.k.a. the backbone of  our consumer-fueled country) are going to be saving more and spending less. Not a good sign.

Unemployment Rates are also on the Rise

It's also clear from ChangeWave’s research that unemployment rates will rise over the next few months.
The Bureau of Labor Statistics (BLS) has admitted that they were off by about a million jobs when they counted in 2007. Combine that with the 500,000 to 1 million jobs we will probably lose in the next few quarters, and we're headed toward a 6%-plus unemployment rate, which will only exacerbate this recession.

The Fed Is Not Helping

Ben Bernanke and his cavalry of interest rate riders have tried to fight back against inflation and the upcoming recession, but frankly it may be a little too late. Yes, we'll all certainly see some up days in the market, but the spending contraction is already under way, unemployment rates are going higher, and stocks are now up a tree and facing down a bear market.

Bull or Bear—Donkey or Elephant—Here’s Your Pre-Election Investing Game Plan

Acting like a deer caught in the headlights of the bear market and recession that are barreling toward your portfolio could mean losses of 25%-50%. And if you're heavily growth-oriented, you might see short-term losses in the neighborhood of 50%-60%—if you don't get out of the way of this freight train.
There are investments out there that go up in value even in bear markets.
And you can avoid the portfolio damage with Toby Smith and ChangeWave Investing’s” “Recession Game Plan”—which works wonders in bear markets.  With the help of the Alliance Research, the game plan will not only help you preserve capital, it will make you money. So what’s Toby’s strategy? Fight the bear market with bear-market exchange traded funds. See, bear-market ETFs are a relatively new investment vehicle, and man do I wish we had these back in 2001 and 2002!  These funds correspond with the inverse of the market indexes—so as the market goes down, they go up.

Here are three ETFs that Toby and his team at ChangeWave are looking to add to their portfolio ASAP:

ETF #1: This ETF is perfectly poised to benefit from the downtrends in small- and mid-cap companies. Although there is no doubt we are in for an out-and-out bear market, we'll obviously have days when the market melts up. And that’s when Toby and his team plan to strike! To see ChangeWave Investing’s Buy Under price, click here.

ETF #2: Stocks are going to be hit hard as this bear market finally bites down, but it’s the small caps that will feel the most pain. That’s why Toby’s first play is this ETF that is leveraged to profit two times the inverse of the small-cap Russell 200 Index.

ETF #3: If you think China’s stock market is going to keep barreling ahead despite the U.S. recession, you’ve got another thing coming. About 19% of China’s exports are bought by the United States, so there’s really no place to hide when the U.S. consumer spending takes a dive. Toby’s next play makes perfect sense. He’s been recommending this international ETF that’s designed to go up when a foreign market goes down. This ETF moves at twice the inverse of the FTSE/Xinhua China 25 Index, which is made up of 25 of the most liquid companies available to international investors on the Hong Kong Stock Exchange.

ETFs are only one of the profit-making strategies ChangeWave Investing is using to navigate through this recession and emerge with their portfolio intact (by the way—if you want the names of the ETFs Toby is buying, check out the January 16th ChangeWave Investing Alert). To get the meat and potatoes of the entire strategy, click here for your 100% risk-free trial subscription to ChangeWave Investing!  Hey, the ChangeWave Investing game plan worked back in 2001. It saved subscribers billions of dollars in losses! Join today and come out of this bear market with your capital intact!