Sometimes it’s easy to get lost in the day to day gyrations and it’s difficult to simply formulate a game plan to get through the trading day. Something I noticed while going over my charts tonight was the extreme weakness in the financials, consumer staples, and transports. Judging by the steep decent and the downtrend we are nowhere near a bottom as down volume days continues to outpace up days. A little common sense can do a trader well, and any economy needs these sectors to strengthen before a stock market rebound.

Tech has been a bright spot holding this market up recently and Cisco is going to throw water on those ashes tomorrow. I’ve been tossing different scenarios as to how the US economy can survive this recession without it getting real bad, and I can’t think of anything that can save us from a severe depression. Government interventions has never worked and probably never will.

Consider this. The American consumer which accounts for 2/3 of the growth of US has had to deal with a stock market collapse and falling real estate prices that will likely continue to fall. It’s highly unlikely that unemployment is yet to be fully discounted in the market, as every day more companies report layoffs.

 Until workers stop loosing jobs, not even a tourniquet can save the market. It’s one thing if consumers have the money but are afraid to spend it. It’s something completely different if they don’t have the money to spend. Without consumer spending, the markets are toast. The more the markets fall, the poorer everyone feels and retrenches more. We’re stuck in a vicious downdraft that resembles a vortex.

Here’s the upside. This will likely be the worst of times for all traders of this generation. Once we get through this, and it could take well into next decade, it should be blue skies ahead.