Stocks traded dramatically higher last week in response to a stunning advance in the U.S. dollar and a sharp decline in crude oil and natural gas prices, ending with an Olympian 302-point long jump on Friday. Yet that has been followed with a couple of triple-digit down days this week, taking us right back to the levels of last Tuesday.

You just have to shake your head at the tremendous volatility that we have seen lately. So what does it all mean?

It's a bit hard to see through the fog of war, but the action continues to validate my forecast that we're on a very bumpy journey higher toward the 1,335 area of the S&P 500. It's like a ride on a mountain road in a four-wheel-drive vehicle with bad shocks. We're getting jostled around like crazy, but slowly we're rumbling higher.

I do still think that we're headed for a cliff at the top of that mountain, but we'll leave that subject for another day.

The key thing you need to understand right now is that the recent decline in crude oil prices was not the main event. It is just an effect of the incredible jump in the value of the U.S. dollar, which this week completed its best rally in a five years.

The buck is rallying because traders around the world are coming to the realization that as tepid as the U.S. economy may be, it's better than much of the rest of the world. New data this week revealed that several countries in Europe, as well as Australia, are sliding quickly into a credit-led recession.

When the dollar on Friday jumped three cents again the euro—a number that doesn't sound like much, but is huge in the currency world—the crash in commodities regained momentum. This is because, as you probably know, most commodities are priced in dollars and thus as the greenback becomes more valuable the amount of money required to buy them shrinks.

Crude oil has fallen to the $112 mark, copper also sank to a six-month low; the Baltic Dry Index, which tracks ocean shipping rates, has declined by 30% over the past month; and base metals lead, nickel and tin are all down hard.

There's an old saying that copper has a PhD in economics. This means that when the red metal's price rises or falls, it usually forecasts a change in trend in the global economy. With copper down so much lately, it seems that Dr. Copper is saying ixnay to world growth. Given the matrix of data, then, it's hard to escape the view that we're headed for a synchronized global recession.

Every G7 country's stock market is now in bear market territory or close to it, and Brazil, Latin America and Russia are on the verge of following the United States, Europe and China into the growl zone.

In one of my presentations at the Money Show in San Francisco on Friday, I showed charts which make the case quite emphatically, and the roomful of sophisticated investors seemed pretty shocked by the news, which makes the finding all the more valuable.

Only two sectors have looked lately like they had a shot at avoiding a bear market because they had been holding up quite well…