Reasons to be bullish or bearish:

Bullish:

1. 2008 election period timeframe. The administration and the PPT will do what it takes so that George W Bush junior doesn't suffer the fate GB senior did. A slowdown coupled with a lousy market would basically wipe out any chance Republicans might otherwise have had.

2. China Olympics. China induced liquidity in terms of interest rates and an undervalued currency. They'll do their best to ensure an orderly world economy before their big moment in the sun next year. I'm not too sure if the Chinese markets can double from where they are right now. A PE of 110?

3. Fed rate cuts. Historically, stocks have outperformed by a big margin over a 6-12 month period after the fed starts cutting rates.

4. Massive 9:1+ up day the day Fed cut rates.

5. Over the short term, analysts have cut estimates sharply, which should be bullish when companies start reporting next month.

Bearish:

1. Rising 10 year yields. Rising yields often presage declining markets.

2. Margin pressure on companies because of commodity inflation. This might manifest itself towards the latter part of 2008.

3. Short term overbought. The markets should experience some profit taking the next week or two.

4. Pre-earnings funk before we hit October. Seasonally a weak time to be invested.

5. Long-term. Wouldn't surprise me if the earnings estimates of the Financials are revised downwards. With the financials contributing 31% of the S&P, how is that bullish for the market?

6. Real-estate induced consumer weakness.

IMHO, Any weakness over the next 2 months would be a great buying opportunity for the next 6-12 months.

Check out the massive 1000 point breakout in the BSE index in India. Indian sensex had been under performing most of 2007. As it breaks out, prepare for BSE 20,000. That's a good indicator of the return of risk appetites. Is this the final hurrah for the Indian markets? Stay tuned for my analysis on market returns in India given current interest rates, rupee valuations, and BPO forecasts.