There's only one word to sum up Friday's stock market action: horrible.

I must admit that for the past couple of weeks I've adopted an increasingly cautious tone on stocks. My technical indicators just weren't acting right. I was suspicious of last Thursday's "wonder rally," and then Friday's 395-point breakdown on the Dow confirms that the problems are real.

Two news items, in particular, triggered Friday's sell-off, but the massive $10.48 per barrel spike in oil prices was actually the lesser of the evils. More troubling, in my judgment, was the steep jump in the unemployment rate to 5.5%. The jobless rate now stands a full percentage point above its year-ago level.

Since the early 1950s, an increase of 1% or more in the unemployment rate within the space of a year has always signaled a full-blown economic recession. We're probably in the midst of such a slump right now. Until we get a better fix on the ultimate depth and length of the recession, I'm advising my Profitable Investing subscribers to lean toward defense in their investment portfolio. Perhaps you should do the same. Keep ample cash on hand, trim your holdings of poorly performing stocks and take your sweet time with any new purchases.

I mentioned earlier that the unemployment news bothered me more than the oil spike. Reason: Eventually, I suspect, weakness in the U.S. economy will spread overseas, dampening demand for fuel even in fast-growing markets like China and India. Oil prices, in turn, will cool down, at least for a while.

If you own a lot of second-tier oil and gas producers, or a big stake in oilfield service companies, now is a good time to cut back. You should get a chance to build up your position again late this summer or in early fall.

Visit back often for more news and advice on the every-changing market and how it affects your investments.