Sun 11/20/11. Bottom near?

(Update Wed 11/23/11 3:45PM EST)
The System was only at a 50% position size after the drop today, but it fully exited its short position at 1171.36 and went long. Whether or not I had been using 2-candle resistance due to long mode or 4-candle resistance in short mode, the System would have exited, but it only went long because my bottoming indicators are in place (TRIN>2, NYAD extreme low, %BB10 extreme low, 60min posd, VIX lagging) near a projected cycle low (Nov 25) favoring a trend change to long. One or 2 whipsaws is highly possible and I may regret this happening just before a long holiday weekend with tremendous news risk, but my System is based on technicals. The stop will be placed 0.5% below the pivot low. Good luck and Happy Thanksgiving!

P.S. Bad close. May get stopped out for a loss Friday. Money flows showed a ton of SPY buying on weakness on Tuesday and a large amount again today. http://online.wsj.com/mdc/public/page/2_3022-mfgppl-moneyflow.html?mod=mdc_pastcalendar That guarantees nothing but it typically shows up at a bottom like it did on Aug 4&5 before the Aug 8 low. The problem is that the market needs a catalyst and it seems that false European bravado and the rumor cycle may have run their course, so it's yet to be seen if SPX can catch a bid for 2-4 weeks starting on Fri/Mon.

(Update Wed 11/23/11 10AM EST)
System 2-candle resistance in preparation for long mode has fallen to 1190.57. The System took 25% profit after the open. I usually bump s/r if a pivot is near the candle extreme, but the nearest pivot above 1190.57 is a little too high at 1196.81 so we'll stick with 1190.57. It appears that people don't want to stay long through the holiday and who can blame them. That probably sets up SPX for a large relief rally on Fri/Mon or a pent-up gap down depending on what happens in Europe while our markets are closed. One thing that is difficult to factor into technical trading is the risk-off CYA effect of things like MF Global especially over long weekends, so a cautious trading approach is advised. Accordingly, the System will likely only keep a 50-75% position size into the Wednesday and Friday close. Good luck and Happy Thanksgiving!

(Update Tues 11/22/11 9PM EST)
SPX made a lower low with posd and bounced, but it never quite surpassed resistance at 1198.50. The System remains in short mode taking 25% profits every 1% lower and reloading every 10pt bounce. The System will switch to long mode on a move above 1198.50 followed by a 30% retracement or, if SPX drops lower as futures are suggesting, resistance will also fall to 1196.81 then lower. A move much below 1180 would put a bullish December rally back near 1293 in serious jeopardy. Good luck.

(Update Mon 11/21/11 9:40PM EST)
So far so good. The System will finally go into long mode on a 2-candle resistance break once the 1183 bottom is retested even if it holds by a few points. Yes, I am aware of the possibility of a 3of3of3 down, but I can't ignore my spending and cycle analyses as well as the bottoming indicators. And we'll place a stop within .5% of the pivot low. If SPX does rally, there is still reason to suspect limited 1-2-1-2 upside into end of month and there is low-volume Europe-driven holiday risk with cycle allowance for further downside, but I am still favoring a rally into Dec 10-15 +/-. The following site is one I don't often agree with, but he is using the ABC count I described below. Good luck.
http://marketthoughtsandanalysis.blogspot.com/
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The System has remained in short mode as SPX has triangulated over the last couple weeks with a cycle bottom projected around Nov 1 and a mid-cycle low projected around Thanksgiving. For the 4th time in a row, the mid-cycle low has been lower, so I will officially flip my cycle/mid-cycle projections going forward until proven otherwise. Here are several strong reasons for a bottom this week.
1. System projected low on Thanksgiving +/- with TRIN>2 on Thursday.
2. Typical Thanksgiving-Christmas bullish seasonality.
3. EW 3-wave correction thus far with a B-wave triangle and 5ofC down remaining to 1180-1200.
4. I'm seeing a lot of chart comparisons to the 2008 collapse this week much like most people expected the SPX triangle to break upward last week.
5. The US Dollar looks like it could be completing an LDT/EDT up. Once that breaks down in the coming days, SPX should rally.
6. My consumer discretionary spending analyses suggest an SPX top in mid-December
7. Support at 1180-1200 due to the 50dSMA, round number, price-volume, Fibs and OEW pivots.

Of course, if the US Dollar LDT/EDT proves itself to be a 1-2-1-2-1-2 up and SPX proves itself to be a 1-2-1-2-1-2 down instead of an ABC with a triangle mixed in and the credit markets continue to deteriorate, SPX could be in big trouble like 2008. But, my work favors a rally into Dec 10-15 and then the next mid-cycle low in late December and full cycle low in mid-to-late January. I suspect hedge fund redemptions in early January combined with tax-based selling, cycles and the spending lag will all contribute to a massive collapse in a 2-3 week period in January probably starting down in a choppy 1-2-1-2 manner in the second half of December.

The System will finally go long for a 2-4 week rally this week probably on Mon/Tues. There could be whipsaw 4-5s and 1-2s for a few days. I'll try to make a few posts this week. Good luck.