BEND, Ore. (MarketWatch) — A dreaded “double dip” could already be upon us, and that spells bad news for governments, the global economy and most investors who are still in recovery mode from the “Great Recession.”

The last time the economic and technical picture looked this shaky was in the days and months after our not-so-fondly remembered Lehman Brothers Holdings Inc. LEHMQ event of Sept. 15, 2008.

Now incredibly, nearly three years later and in spite of central banks and powerful governments taking unprecedented and historic measures to right the global economy, we find ourselves steadily drifting toward the white water of another financial waterfall.

One quick glance at the chart of the S&P 500 Index SPX, +0.82% , proxy for the U.S. stock market, brings the image of the “waterfall descent” clearly into focus.

It’s quite easy to see how all nearby support levels have been taken out and the index did a vertical swan dive below its all important 50- and 200-day moving averages. Furthermore, the 50-day average is curling over and looks like it will soon cross the 200-day average to form the widely recognized “death cross,” oftentimes considered as confirmation of a new bear market.

The fundamentals also virtually scream bear market:

Has S&P set stage for QE3?

1. On Friday, Standard & Poor’s downgraded the U.S. credit rating with a negative outlook. Over the medium term, this can’t be good for equities markets or corporate profits as confidence has been damaged, interest rates will very likely rise, growth will probably slow and all of this could work together to easily tip an economy that grew at just 0.8% in the first quarter into a double-dip recession.

2. China pounced on the U.S. downgrade, but things aren’t so rosy for the dragon either, as its economy slides into contraction, according to a recent purchasing-managers index from HBSC that came in at 49.3 for July — a level not seen since the end of the financial crisis in March 2009. Read more on China ripping U.S. on debt-rating downgrade.

3. Italy and Spain continue their convulsions, so strong and persistent that an emergency weekend phone meeting was called among European leaders, a couple of whom had to interrupt their near-sacrosanct August vacations to attend. German investor sentiment and PMI are also in decline, and a slowing German economy can only add to the already dour outlook for the once-shining euro and the global economy.

4. Economic reports at home continue to be dismal and clearly indicate a slowing second quarter on top of a razor-thin, first-quarter growth rate that makes for a difficult math problem to come out with a positive bottom line for the second half of 2011.

As the iconic cartoon dog Scooby-Doo used to say, “Ruh-ro.”

So where and how can we work our way through this period without getting swept into the “waterfall” decline?

Since opportunity is the flip side of danger, here are a couple of exchange-traded funds to consider as we head toward the Great Recession 2.0.

While Treasury bonds could take a short-term hit in response to the credit downgrade, it’s likely to be short-lived as the U.S. Treasury remains the “least ugly of the ugly” and as investors look for safety around the world.

The technical picture also looks strong for now, as iShares Barclays 7-10 Year Treasury IEF, -0.27% has been in a strong uptrend, well above its moving averages after forming a “golden cross” in early June.

Switzerland, the perennial banking stalwart and bastion of financial security, continues in that role today as the Swiss wisely dodged the euro and its current dilemmas, and now finds itself as a new safe-haven currency, as illustrated in this chart of the CurrencyShares Swiss Franc Trust FXF, -0.15% .

Finally, we have the much-maligned and widely misunderstood category of inverse exchange-traded funds. The chart of ProShares Short S&P 500 Fund SH, -0.87% clearly indicates how one man’s bear market becomes another man’s bull for those willing and able to turn a chart and a market on its head, rather than be a victim as the bear mauls portfolios across the globe.

After last week’s washout, a proverbial “dead-cat bounce” would not be surprising in the short term, but nevertheless in my humble opinion, it’s very likely that we’re already in a double-dip recession — only we just don’t know it yet.

However, Mr. Market does, as witnessed by last week’s panic selloff, recent net redemptions from money-market and mutual funds, deteriorating economic reports and the desperately chronic lack of job growth.

This recession could be especially nasty, since it would start from a 9.1% unemployment rate and with government stimulus definitely off the table after the just-concluded soap opera of the debt-ceiling debate. The only unknown is whether Dr. Bernanke and his colleagues can pull yet another rabbit out of their collective hat.

Regardless of what happens over the short term, one thing is certain in this uncertain world: Investors don’t have to face these times as victims, but rather can use the power and flexibility of exchange-traded funds to sidestep danger and look for opportunity as we slog through the long and tiring days of the Great Recession 2.0.

Disclosure: Wall Street Sector Selector(wallstreetsectorselector.com)actively trades a wide range of ETFs and positions may change at any time. Wall Street Sector Selector is long SH.