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Question: Jim, are you bullish or bearish?

Answer: It depends on what time period we’re talking about.

In the very short-term, say the next 4 to 6 weeks, I’m bullish. I think the market is gradually inching its way higher after breaking through resistance at 1108 on the Standard & Poor’s 500. The summer rally could take us up another 30 or 40 points on the S&P 500 from here. This isn’t likely to be a huge rally but it is a rally. (For more on the summer rally see my post )

In the middle-term, say the period from late July through October, I’m bearish, especially on developed market stocks.

This is the weakest period for stocks in most years and we’re looking at major unresolved worries about the euro debt crisis, the strength of the economic recovery in the United States, and higher interest rates and monetary tightening in China and other developing economies. (For what worries me in the middle-term see my post )

In the longer-term, say the year that begins in September, I’m bullish on developing market stocks. I think we’ll see an end to interest rate increases from central banks and a gradual lessening of worry about the pace of economic growth in the developing world, especially China. (See my post on what indicator will tell me that the time to buy is approaching )

I’m selling into the current rally because 1) I don’t think it will last terribly long, 2) I think stocks will decline in the August through October period in developed markets, and 3) I want to have cash to invest in developing markets when the time is right.