The 2-year and 3-year Adjustable Rate Mortgages (ARM's) that were originated from 2003 to 2006, will reset all the way to 2009. People that get hit with the increase in monthly mortgage dues will have to cut down on non-staple goods like clothes, jewelry and electronics.
At some point, the average American consumer, despite a solid unemployment rate, will feel the heat and stop spending like crazy, especially if you take away their free source of extra income - their home. Over 40% of consumer purchases are done with a credit card, and when those credit lines get maxed out, consumers will truly have no way to live beyond their means, a phenomenon that is the root cause of this housing market collapse.
When the consumer finally gets tapped out, countries like China and Mexico that export toys, clothes, jewelry and electronics to the US will face a reduction in demand for their exports, and will find themselves having excess inventory and excess capacity.
Keep in mind that consumers in these countries are not like the American consumer. People don't borrow in those countries to furnish their homes and drive in expensive cars. So no one will be able to pick up where the American consumer left off.
Emerging economies will face this problem soon and that will cause their growth to stall.
Now the scenario above is not probable, but it is quite possible, and it is this possibility that makes the stock market unpredictable.