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This week, markets began to demonstrate many of the characteristics one would expect when approaching a key inflection point. There was heightened volatility, spectacular short-squeezes, and palpable euphoria, along with some underlying angst that the more speculative stocks are gaining the most ground. There are also indications that the "smart money" is increasingly nervous and beginning to lighten up on some positions (including our currency). Yet it is amazing how many have completely bought into The Notion of a Golden Age of Permanent Global Prosperity; that the omnipotent Fed has everything completely under control; and that surging energy and commodity prices are but a sign of how wonderfully healthy the global economy is these day (ignoring that we are instead immersed in history’s greatest Credit and Asset Bubbles). One should now be on guard for that exacting oscillation between "gee, things are just marvelously splendid" and the "oh my god, the end is near" – The Unpredictable Greed and Fear Seesaw – that will embroil global markets in a period of uncertainty and volatility.

Doug Noland is a market strategist at Prudent Bear Funds. Their website is www.prudentbear.com.