Chapter 8 on "Spotting Bottoms in Stocks" is one of the best sections of Jim Cramer's Real Money (review). The chapter is filled with the type of insights you would expect to get from someone with 25 years of experience in the market.
The chapter does discuss spotting bottoms in individual stocks, but Jim spends most of his time on indicators he uses to spot market bottoms. These indicators (collected into three categories) have been shared by all four of the last big market bottoms (1987, 1990, 1998, and the "double bottom" in 2002-2003).
Note: All quotes are from Jim Cramer's Real Money unless otherwise noted. I've cited which page the quote comes from so readers with the book can follow along at home.

1. Market Sentiment

The first group is a collection of the following indicators. The theme here is that bearish sentiment implies that money has already been pulled out of the market and is itching to be reinvested.

• "The pain makes the front page of the New York Times" (page 212).
  During a downturn, there will tons of market pundits (and bloggers) writing about how terrible things are. Only when the news hits the front page of the major papers will we consider the market officially bottomed-out.
• The Investors Intelligence survey of money managers.
  You can get these numbers, which surveys fund managers and compares the % of bulls vs. bears, in Investor's Business Daily every Thursday, or Thursday nights at Market Harmonics. Cramer is watching for a majority of bears and less than 40% bulls. The idea is that people bearish about the market have already pulled their money out and thus can't pull the market lower. For more of this kind of discussion, check out the blog Trader's Narrative, which has an interesting analysis of the American Association of Individual Investors (AAII) bearish sentiment numbers.
• Mutual fund withdrawals.
  Cramer is looking for "consistent, repeated outflows of several of several months" (page 215).
• The Volatility Index (VIX).
  Is the market in a panic? Cramer is looking for readings above 40 in the VIX.
  VIX at Investopedia.
• Oscillators.
  There are a lot of oscillators out there. In general, they are used to indicate when a stock (or market) is overbought or oversold. Jim swears by Helene Meisler's oscillators over at RealMoney.com, but you're going to have to pay to see them. Phil Town uses the Fast Stochastics. While Bill Cara is a big fan of the Relative Strength Index (RSI).Once again, Investopedia is a great place to start for Getting to Know Oscillators.

2. Capitulation

This next set of indicators is all about finding a "crescendo" in the market, that last big sell off before the bulls move back into the game.

• "A dramatic imbalance in the amount of new highs to new lows".
  We're looking for a large number of new lows and not very many new highs. Cramer looks for "between four hundred and seven hundred new lows and only a handful of new highs" (page 217).
• Forced margin selling.
  Investors trading on margin (borrowing money from their broker) need a certain amount of money in their accounts to "maintain" their margin. In down-trending markets, these investors are going to lose so much money that their brokers will force them to sell their positions. Cramer depicts a scenario where the brokers try to get some more money out of the traders during the morning before laying down the hammer and forcing a sale of the trader's positions sometime between 1:30 and 2:30 in the afternoon. For this reason, Cramer watches for a spike in sell offs between 1:30 and 2:30PM. When the spikes stop coming for a few days, the margin sellers are shaken out and the market bottom is near. I found a surprising source in the SEC, while looking into this:http://www.sec.gov/investor/pubs/margin.htm.
• "A dramatic spike in volume on the exchanges" (page 219).
  Cramer gives an anecdote to explain this one. I won't re-tell it. So you'll have to pick up the book (the book!). The lesson: "Let this serve as a reminder to you not to sell into the big volume after a long decline. That's the time to buy, not sell" (page 220).
• Flow of underwriting.
  "You don't commit capital until the most recent underwritings have worked" (page 220). Cramer describes a cycle of IPO and underwriting activity. It goes something like this: IPO stock prices go up for no reason » IPO stocks are pretty level after the offering » IPO stocks are trashed after the offering » (again) IPO stocks are pretty level after the offering. You want to buy into the market when this last situation is prevalent.
• Order imbalances.
  "Repeated order imbalances sans news are sure signs that the capitulation has reached absurd levels and you have to make your move to buy" (page 222). You're only going to see this message if you're on the trading floor, but maybe someone will report/blog about it if they started showing up more often. Order imbalances at Investopedia.

3. Catalyst

Jim's stance is that all market bottoms are associated with a real world event. This catalyst brings on an "exquisite moment", where "you have to buy because the opportunity is so great" (page 222). Previous catalysts were surprise rate cuts by the Fed (1998) and the start of the Iraq war (2003). Amazon's poor earnings probably doesn't count. Israel waging war on Lebanon/Hezbollah is probably not going to cut it either, but further US involvement could lead to a catalyst. You can't necessarily predict the catalyst that will surge us into the next bull market, but you can try to be ready for it.
BONUS - How to tell if you've missed the bottom: Jim suggests watching the Bank Index (BKX), which has some typical behavior during, or just after, a big market bottom. "If you see a 10 percent move up in the Bank Index you are already well into the upswing, and it might pay to wait for a couple of profit-taking days to transpire before you commit capital" (page 224). Jim doesn't give a time frame for the jump. Here's a chart of BKX from Yahoo. There was a 10% jump last October, which did correspond with a large rally. Presumably, we'll see another jump at or after a market bottom.
We may not be near the market bottom right now, but a lot of people seem to think we're on the way. Keep these indicators in mind if things don't turn around. You'll want to be able to spot the bottom when it comes.

TPC

• GS - on ISM data
• High level of growth favors cyclical parts of the equity market.  slow rate of change signals a shift to become more defense at the sector level.
• ISM has remained above 50 for 20 straight months and above 60 for 4 months.  However, the index may have peaked at 61.4 in feb.  SPX and most sectors pause around teh ISM peak allowing time for investors to confirm a transition is underway and re-allocate portfolios into later cycle parts of the market.
• Around previous peaks, S&P has consolidated gains for about 3 months before resuming median positive returns of 13% as ISM fall from peak to 50.  [Variance is wide on this estimate]
• 
  

TradersN

• MY Ratio (Middle-Young,Mid-Young or Demi-Ashton Ratio [Mirae Asset]) - Middle Aged (40 - 49) to Young Aged (20 - 29) Ratio (very long term macro) - people in their 20's need to save a lot while people in their 40's have paid off most of their house and will put money in the market.  This leads to an expanding PE ratio
• Russia, Hungary, Japan, Greece, Poland, Ireland, Portugal, Spain have the best ratios (now)
• Canada, Australia, Netherlands,US,Chile, Switzerland have the worst ratios right now (stabilize in 2014, then grow from 2014 => 2030)

Greenblat strategy.  buy 20 - 30 stocks that meet his criteria every year.  This strategy will not work every year, but overall the long term, it will generate about 15 - 20% return

1. Pre-tax earnings yield => 1/ (EV / EBIT) > 20%
2.  Pre-tax ROC = EBIT / tangible capital employed > 100% => TCE = tangible fixed assets + inventories & receivables - non-interest bearing liabilities
3. Invest in companies > certain market cap

Long Term Eval

Fundemental Stuff

1. Brand
2. Market Cap (market value) vs. Enterprise Value [EV] (price to purchase business) => look for less than $8B
3. EV / FCF < 10 (FCF = free cash flow / share [cash available for distribution], LCFC (cash available to stockholders after interest payments)
4. Historical vs projected growth (use the more conservative estimate)
5. EV / FCF / G < 1.0 (normally priced is about 1.5)
6. EV / FCF / ROE < 1.0 (1.5 is bad)
7. Shareholder dilution (<3% if rest all the above is good)
8. EV / EBITDA = # of years for investment to pay for itself. (same as #3)

TPC

• S&P Index and jobless claims have a very high correlation.
   

FT

• ZIP - zipcar IPO at $18, but traded to $28 ($1.1B MC).  IPO proceeds of $170M
• Founded in 2000, and allows members to book short rentals via the web or phone for cars it owns and parks in public garages
• Largest Markets in Boston, Washington, NY, SF, London.  Only in 14 metro areas
• Has yet to turn yearly profit (Rev = $186M, OpEx $193M, $8.3M interest, $137M Debt)
• IPO proceeds will be used to pay off debt
• When GDP / capita gets between $13k - $18k (median $15k) growth slows down an average of 2% because the easy and fastest phase of growth lasts as long as unskilled workers can be hooked into a rudimentary industrial economy.  The next phase involves less dramatic changes in industrial productivity and a shift towards less productive service businesses.  China is about 4 years away from reaching the average tipping point.

Barry Knapp - head of US equity portfolio strategy at Barclays article

• 3 drivers for equities and sectors - business cycle, valuation, and fundamentals
  
  • When you are at the stage of the business cycle, where economy is improving and Federal Reserve policy is still accommodating, you would probably give the business cycle roughly a 75% weighting in your model.  That is really the key to to how the equity market does this year.
  • Whenever the ISM falls from 60 to 50, a natural progression in the business cycle, things like margin expansion and analysts' earnings estimates are decelerating, but margins and earnings aren't declining.
  • Philly Fed has a measure of economic-forecast dispersions going back to 1968, if you line that up w/ SPX earnings yield, it maps pretty well and it might overstate importance of business cycle on equity-market valuations.  However, during periods of PE multiple expansions, there were also long business cycles (9 - 10yrs).
•  Stock market valuation EY = 7%, 10-year T-Bond real yield (rate - inflation) is 1%.  Spread of 6% is highest we've seen since early 1980s
• SP500 earnings forecasts & margins
  
• Currently at $93 / share.  Margins typically peak 6 - 9 months before a recession.  Expecting about .4% margin expansion.
• SPX forecasting 5.5% revenue growth => roughly nominal GDP plus 100 basis points from greater % of foreign sales this cycle, strong international growth relative to domestic growth.  Add 40 basis points of margin improvement, and that gives you 11% earnings growth yoy
• Unemployment - in 1983 it fell from 10.8% to 8.3% in a year, but didn't go below 7% for 3 more years.  We may drop below 8% by the end of the year, but then it could take 3 more years to go below 7%
• Sectors - buy cyclicals and avoid defensive sectors.  that goes back to the same dynamic about business cycle being more important than valuation or even fundamentals at this stage.  You should be in cyclicals up to the point when the Fed starts normalizing policy.  Then, valuation becomes more important (ie: heavier weighting your model)
• Small caps - in this sweet spot of the business cycle, small always outperform large.  That was true in 80s, 90s and past decade.  How they do after the Fed normalizes policy has a lot to do with relative valuations.  90s and 2000s, they outperformed because they were cheaply valued.  This time, they are richly valued, so once we get Fed normalizing policy and beginning to drain liquidity, valuation will be important.
• Energy and industrials are at the top of our list, because they are sdtill getting margin expansion.  They are late-stage cyclical sectors, and that is what works best at this stage.  Financials and tech should work reasonably well.
• Financials - dividends / buybacks were a sideshow.  The real story is $1.3T - $1.8T in excess cash in the banking system.  Once banks increase risk tolerance and start to put that money to work in securities and loan portfolios, all of a sudden you have a strong revenue outlook for teh sector.  ROE can go to 12% from 9%, then banks belong at 1.5 BV not 1.1BV
• Fed policy 
• they will stop expanding in June, but keep balance sheet stable through Sep or Nov
• if data is strong at that time, it will likely trigger a typical equity-market correction that you get when Fed begins to normalize policy, it will probably cause an 8 - 10% correction.
• Housing - we just need housing to be not negative so it doesn't' create a big negative-wealth effect.  The only way we can do that is if a bunch of shadow inventory owned by the banks/Fannie Mae / Freddie Mac comes to the market all at once.