What To Prepare For?

While I spelled out my bullish case in Nov 28 weekly outlook, I want to prepare for a possible European debacle-induced last sell-off of 2011. It is not going to be telegraphed, it will come from nowhere, and could happen in the next few days or so. The main reason - lack of credible European debt crisis solution. I am also a little worried about geopolitical issues creeping into the market, which is shown in oil chart.
This possible sell-off will not totally negate the whole rally from Oct 4 low. But I think that it will go below last week's lows and stop a lot of longs out (me included). To prepare for this, I am scaling out of more of my longs right here @ SPX 1200, and moving my stops to my entry levels, and will await 50 dsma test or will be stopped out on my last remaining portion. As I said yesterday, there is absolutely nothing wrong with taking profits. If I am wrong on this possible sell-off, I will participate in rally above 50 dsma on SPX with my remaining portion of longs.

In my Nov 28 weekly outlook I included twin charts of SOX and XLF, which are 2011/ 2010 carbon copies, and showed a support zone below last week's lows on both. In this post I would like to show one more - DJT (Dow Jones Transportation Average). This is my favorite cyclical indicator. It has led this entire year. I will use it to gauge where the possible sell-off may end. Resemblance with 2010 is stunning! I will reenter my longs (if stopped out) at those support levels and ride them into the end of 2011.

DJT has many supports below
Inverted Head & Shoulders Bottom forming?