Stocks added almost 4% last week, thanks to another $600 billion in quantitative easing from the Federal Reserve, but further gains in the days ahead are likely to be more muted, says Kenny Polcari, managing director at interbroker-dealer ICAP Corporates.

After all, stocks don't move in a straight line, Polcari says, and a relatively light week of earnings reports and economic data should give the market a much-needed chance to catch its breath after enjoying a run that's put the major averages at two-year highs.

Stock market outlook"I think you're going to see the market backfill," Polcari says. "It needs to backfill. It needs to churn to catch up with itself, and I think that's what you're going to see this week."

Farther out Polcari sees a chance for the S&P 500 ($INX) to add another 3% to 4% as investors who've thus far missed out on the rally get sucked in by the allure of rising prices.

"There is still money on the sidelines," Polcari says, "and with quantitative easing, stocks and commodities are only going higher."

For more on Polcari's view from the floor of the New York Stock Exchange (NYX), see the video above.

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sipp12

OE2 is more window dressing which will help only a narrow segment of our market. The QEI put a trillion dollars into our banking system with negligable effect and I see nothing new with this round of easings. The banks simply are not putting this cash to work in the corporate sector thus funding the new R&D projects necessary to broaden our market recovery into the middle and lower income sectors which represents the largest part of our consumer population. The high end corporate sector is showing good earnings growth by expanding into global developing markets as they continue to lean down their domestic operations which continues to either fuel more layoffs or cuts in working hours and benefits for our salaried employees. So until the money comes back into the broader domestic corporate sectors which directly affect the spending power of the average American working family, we will continue feeling the pinch as the high end more affluent sector continues to spend and frolic in the sun. Fear and greed ultimately drive markets through boom and bust cycles and right now people are still scared which has our banking system frozen like a deer in the headlights. The price we pay for the excesses of the free lending drunkeness of the past 10 years. The resulting hangover is no fun. These things take a lot of time to settle back down and to normalize. Simply put, when economies become frozen by fear, they stop expanding until confidence is restored. Obama and his cronies need to stop the devisive rhetoric and start using more positive and unifying language. That is where it all starts as always; with strong Leadership.

November 08 2010 at 10:47 AM Report abuse +1 rate up rate down Reply
tsafa

QE2 is just money printing, as was QE1. It is a tax on us all as it makes our saving worthless. This is Obama's income redistribution plan since he can not raise taxes directly, but can spend the newly printed money where ever he wants.

November 08 2010 at 10:36 AM Report abuse rate up rate down Reply
tsafa

Bernenki, STOP PRINTING MONEY ! Let the Free Market Work ! Stop delaying the recovery with cheap gimicks ! Businessmen are not stupid !

November 08 2010 at 10:32 AM Report abuse rate up rate down Reply
GARY

"QUANTITATIVE SPENDING" by the FEDS, JUST ANOTHER BAILOUT from OBAMA and his "LAP DOGS", to BIG BUSINESS!!!

November 08 2010 at 9:39 AM Report abuse +2 rate up rate down Reply
1 reply to GARY's comment
tsafa

QE2 is just money printing as was QE1. It is a tax on us all as it makes our saving worthless. This is Obama's income redistribution plan since he can not raise taxes directly, but can spend the newly printed money where ever he wants.

November 08 2010 at 10:36 AM Report abuse rate up rate down Reply
ingfp

Good sales job! I think the buyer beware mindset would be actually more prudent. There are to many fundamentals out of sync for the market to continue a move upward.

November 08 2010 at 7:09 AM Report abuse rate up rate down Reply