Stagflation

Reading up this weekend I was concerned about the talk of the recession and how it would effect inflation.
Since many tend to believe that recessions take the steam out of inflation, I felt it wise to address this. Just because a recession occurs (or is occurring) does not necessarily mean deflation. Many countries and economies have seen inflation and recession at the same time. This denotes the term stagflation. Watching gold and wheat and oil make new highs as the U.S. slides into recession leads me to believe in stagflation the outlook.
This also brings up the "Decoupling" of the world economies (particularly Asia).
There is much argument of peak oil, and gold shortages and agri shortages etc.
These can be attributed to many factors one of which is billions of people waking up to a modern world.
So what to do.
Stay long the natural resource stocks with very volatile moves up and down. If you trade short term, follow your charts. Make quick moves in and out. If you are more inclined to trade for long term trends, then use diagonals. If you want to be more aggressive (which is not for me) buy the long side, wait for the run up sell the short month and then buy the short month back once the drop happens then do this again.
Please everyone this is for educational purposes. Try these on virtual accounts before undertaking. CBOE.com has a virtual account and if you want to use Optionsxpress they have the same virtual software.
Later