Obviously the trend of the market will be up during QE2, however the market in anticipating this will from time to time get ahead of itself, so to speak, and we can expect periodic pullbacks, as always. And I do agree with Trefoil that the immediate future will like see some aimless wandering before moving on.
In other words the market will ratchet up in fits and starts over the coming months, but at a slightly greater rate up as compared to its long term average since the mid 1970's. Over the coming years the market will move up in line with inflation which has become, since Bretton Woods was abandoned, the primary driver of U.S. stock prices when averaged over a large number of stocks.
Over the next 10 to 20 years the U.S. market should make very little progress in constant dollars. The markets in emerging economies should easily outperform the U.S. markets (in constant dollars), but expect greater volatility in the emerging markets.
Those who are betting on a collapse and a return to the recession lows will be sadly disappointed barring another major financial calamity. If there is a calamity, it is more likely now to be related to excessive inflation than to inadequate liquidity. I disagree with those who think deflation in the overall economy is likely.
