Don't look now folks, but our fragile economic recovery may be on the rocks. Or at least that's what some people are predicting, thanks to a recent spate of downbeat economic news. In fact, Irwin Kellner, MarketWatch's chief economist, suggested that the data show an economy that is slowing sharply. If he's right, our shaky recovery could be in danger of flatlining before it even gets off the operating table.

The bad news … and the good
Kellner is right that the bad news has been coming fast and furiously for the economy lately. After falling throughout 2009, jobless claims have risen in the opening months of the year. Consumer confidence took a sharp plunge in February, while incomes are relatively flat and new home sales fell to a new low, the lowest rate on record going back to 1963. All of these signals seem to point to a potential economic stall.

But don't head for the hills just yet. While some economic data have been discouraging, it's a bit too soon to call this recovery down and out. Despite some downer January and February numbers, the general trend has been a slow improvement across almost all economic indicators.

True, unemployment remains stubbornly high, and likely will for some time, but employment is a lagging economic indicator, which means we won't see an improvement until well after the rest of the economy has gotten back on track. In fact, February nonfarm payrolls came in with a 36,000-job loss. While it seems odd to celebrate the loss of that many jobs, the longer-term trend has been a steady decrease in job losses. I'm betting these losses will give way to job creation in another month or two.

Likewise, the Conference Board's Leading Economic Index (LEI), a measure of expected economic activity, continued to increase in January, although at a slower rate than in November and December. The cumulative change in the LEI over the past six months has been 9.8% on an annualized basis. According to economists at the Conference Board, such a showing indicates that economic recovery will continue, at least throughout the spring. Don't let a few months of gloomy data detract from the larger picture. The economy is improving and will likely continue to do so in the near future.

Expect the best, prepare for the worst
But while I do think the overall trend for the economy is still positive, that doesn't mean we're in for a party anytime soon. This recovery will not be robust, and it will be marked by continued high unemployment. It won't feel like much of a recovery, but more like a slow slog forward.

So what can investors do in such a wishy-washy market environment? Well, first of all, you can set your expectations now. Odds are good that most of the immediate rebound has already happened and that equity returns, at least this year, are likely to be unimpressive.

That means you need to discipline yourself to hold the course, even during uncertain times of market volatility, which we will no doubt see more of in the near future. Keep your outlook on the long run, and the short-term noise and fluctuations won't matter nearly as much. A lot of folks are going to head for the exits again at the first sign of further economic difficulties, either domestically or abroad. Make sure you're not following them out that door.

Secondly, stay away from trends and don't chase short-term performance in an attempt to make up lost ground in your portfolio. For example, if you've never looked twice at gold but are suddenly drawn to its hot returns in recent years, do yourself a favor and don't give yourself the chance to get burned.

There are worthwhile gold-related mining stocks out there worth owning, like Freeport-McMoRan Copper & Gold (NYSE: FCX) and Yamana Gold (NYSE: AUY). But don't start shoving huge amounts of money into a fund like SPDR Gold Shares (NYSE: GLD), hoping that the price of gold will continue to rise. That's gambling, not investing.

Lastly, start looking ahead to where market leadership for the next phase of the recovery will be. So far, the market rally that began a year ago has been pretty heavily focused on lower-quality stocks and sectors. I'm betting that won't be where we'll see the biggest gains in the next phase of the recovery. For that, I'd recommend looking to large-cap blue chips that are selling at reasonable current prices. Tech names like Microsoft (Nasdaq: MSFT) and eBay (Nasdaq: EBAY) measure up on these fronts, as do stodgier consumer names like Wal-Mart (NYSE: WMT) and McDonald's (NYSE: MCD). High-quality large caps like these are long overdue for their day in the sun.

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Circumstances are certainly murky right now, with more and more economists than ever disagreeing about where the economy and market are headed. However, by sticking to your long-term game plan and avoiding short-term distractions, you can weather the inevitable ups and downs and come out ahead in the long run.

Amanda Kish is the Fool's resident fund advisor for the Rule Your Retirement newsletter. At the time of publication, she did not own any of the companies mentioned herein. Microsoft and Wal-Mart Stores are Motley Fool Inside Value choices. eBay is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a bull call spread position on eBay. Motley Fool Options has recommended a diagonal call position on Microsoft. Click here to find out more about the Fool's disclosure policy.