"Assuming my economic forecast holds true, I expect we will meet the test for substantial improvement in the outlook for the labor market by this summer," Williams said. "If that happens we could start tapering our purchases then. If all goes as hoped, we could end the purchase program sometime late this year," he added.That's the beginning of the end for the speculators. What do I know, I'm not an economist, but looking at the slow pace of both nominal and real GDP growth, to the extent they are measurable, I would guess that unfortunately the country is in recession or something close to it if one subtracts the Fed's bond-buying programs.
Currently, though the Fed is super-easy and the Federal government is stimulative, though the second derivative of the deficit has turned sharply negative. However, once that adjustment is made, both the bank and the Fed are stimulating, which makes it difficult to have a major bear market in stocks. Overvalued as stocks are by many traditional criteria, so are bonds, and stocks were vastly more overvalued than today between 1998 and 2001-2. So, yes, they can go (much) higher.