No two ways about it: The Chinese massacre that bashed stock markets worldwide Tuesday has dramatically changed the climate of American investing. The surefire bull market everyone has been proclaiming for months is now suspect and has given birth to a lot more fear and volatility.

So what’s next for the American market? My best guess, which disturbingly echoes the prevalent Wall Street view, is 2007 will be another up year for the market, despite the bloody Tuesday scare.

Why up? For starters, the world is awash in liquidity, with roughly $2 trillion here in money-market funds alone. In other words, gobs of cash to buy stocks. Likewise, the usually skeptical press has leaped aboard the bullish bandwagon, hyping stocks like they’re lost works of Matisse or van Gogh, no doubt swaying lots of impressionable investors.

Yet other catalysts in my mind that are apt to push stocks higher:

• A friendly Fed, which, for the moment at least, seems to have replaced Lucky and Lucy as man’s best friend.

• Still plenty of economic kick globally.

• Moderate inflation.

• An ongoing mergers and acquisitions boom, which will continue to shrink the existing supply of stock. Last year, for example, brisk M &A activity shrunk the supply of American shares by about 3% or about $600 billion. Some say this year’s shrinkage will be even greater.

• No end in sight to the buyback boom, with one company after another, their coffers flush with cash, snapping up their own shares via buybacks and purchases by corporate insiders at the sizzling rate of about $3 billion a day.

How high is the market going? I haven’t the foggiest. Better to ask those experts on Fox’s business shows. They love to make forecasts.

But I wouldn’t want to leave my market outlook on such a sunny note without tossing in some caveats.

My chief worry is the Middle East mess, which easily could get considerably worse before the end of this paragraph. I figure that at some point, the Bush administration will get fed up with Iran’s thumbing its nose in America’s face by fomenting terrorist activity and providing Iraqi terrorists with bomb-making material to kill our troops and say enough is enough. If that’s the case, military action against Iran seems a certainty, which means the highs in oil prices have yet to be seen.

Our country’s rapidly deteriorating global relationships are another worry. Indicative of this, the totally untrustworthy Russian boss, Vladimir Putin, has sharply stepped up his criticism of America and seems to relish siding with our adversaries. Is the Cold War coming back? That’s a naïve question. Clearly, it’s back.

A former chief of the Fed, Alan Greenspan, has raised the prospect of a recession, but the current Fed boss, Ben Bernanke, is predicting moderate economic growth. Let them fight it out, but most economists I talk to think Mr. Greenspan is way off base.

All the polls suggest President Bush’s successor will be a Democrat. Although the market’s robust behavior this year prior to bloody Tuesday indicates Wall Street couldn’t care less about politics, that so-what view, I think, could change pretty fast if the big institutional guns perceive a Democratic White House to be a near-certain reality. Take a look at Capitol Hill. Democrats are actively talking up more protectionist policies and more government regulation. That can’t be ignored.

I keep hearing and reading that the housing slump is dead and buried. But I’ve also talked to some people who tell me they simply can’t sell their houses or apartments. Wednesday’s report that new-home sales in January plunged 16.6%, the biggest decline since 1994, hardly suggests a dead housing slump. What’s more, some real state experts, pointing to all those Mickey Mouse mortgages enabling loads of people to buy homes they really couldn’t afford, tell me that foreclosures, already sharply on the rise, will be enormous.

When was the last time the market had a meaningful correction of, say, about 10%? I can’t remember, it’s been so long. It’s crazy to think sizable market sell-offs are now history. Also, I haven’t seen any guarantees that terrorists have had a change of heart, abandoning the idea of another attack on American shores, which, it’s widely felt, would devastate the market.

Probably the greatest fear about my bullish outlook is that I’m running with the crowd at a time when everyone, I believe, will soon be chasing stocks again. Running with the crowd, as we all know, invariably lands you in quicksand.

The thing to keep in mind, though, is that every frightening market sell-off — from the crash of 1929 to the dot-com crash in the early 2000s — has been followed by a rebound to higher highs. How can you bet against a 100% batting average? The answer: You can’t!

dandordan@aol.com