The current rally in stock prices is just about over for the year, and the Standard & Poor’s 500 Index may soon drop 7 percent, says Doug Kass, president of hedge fund firm Seabreeze Partners.

The S&P 500 will probably dip to a range of 1300 to 1330 from Tuesday’s close of 1404, he tells CNBC. “I think we’re in the process of making a high for the year right now.”

Fundamentals don’t justify stock prices at current levels, Kass says.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

“There’s a pretty stormy outlook. Since June 1, 52 percent of domestic economic indicators have come in below expectations, 11 percent in line with expectations and 37 percent above expectations.”

Investors expect global monetary easing to bail them out, Kass notes, “but I’m not so convinced the Fed is going to move toward QE3,” referring to a third round of quantitative easing from the Federal Reserve.

Fiscal policy doesn’t offer much hope either, Kass argues.

“Increasingly people are looking at our leaders in Washington, hoping they’re going to behave like adults as we approach the fiscal cliff. I think that’s unlikely.”

And on the technical side, the S&P 500 is approaching a “dreaded” triple top, Kass says.

Other investors share Kass’ lack of enthusiasm.

“The light volume demonstrates there’s just little conviction right now,” Peter Tuz, president of Chase Investment Counsel, tells Bloomberg, referring to the volume for stocks being approximately 20 percent below the three-month average Tuesday. “It is a symptomatic of the fact that people are just not that interested in the equity market.”

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.