The stock market probably has one more giant coronavirus-driven plunge left to go

Countless folks on Wall Street are clamoring to be a hero right now by trying to time a bottom for clients in the battered stock market.

No names needed, you know who you are and thanks in advance for clicking to read this story. You have been exposed.

Here is a blunt message to you and your ilk — put the superhero capes away and check your ego at the door. Because the reality is that the coronavirus pandemic has become so unpredictable — along with the eventual recovery for the global economy and Corporate America — that’s impossible to say stocks across all sectors are cheap in any way. This is a bear market that likely has one or two major plunges left in it before the long sought after “capitulation” moment that marks a period such as March 2009, where it made sense to roll the dice on equities.

“There is no question that we’ve seen some signs of at least a short-term capitulation, but unless something is done to quell the “forced selling” that is going on in several different markets, the near-term picture looks quite dire,” says Miller Tabak strategist Matt Maley. “If they can come up with a plan to slow-down the “forced-selling,” the market should be able to bounce strongly over the near-term…and begin the bottoming process………That “bottoming process” will still take time.  We believe that it will involve several strong rallies…but some further scary declines as well.”

Preach, Matt.

Not helping the bottom picker’s cause is that the Federal government is absurdly behind the curve on a policy response (and health response) — and a $2 trillion relief package may not be the major elixir. The U.S. economy has come pretty much to a standstill. To jump start a 50-year-old idle car it usually takes more than a can of gas and a few spark plugs. The same logic could apply to today’s U.S. economy.

Stock market disease and economy health care as an economic pandemic fear and coronavirus fears or virus Outbreak and selling as a bear financial recession concept with 3D illustration elements.

And this isn’t a sharp message from some angry finance media person. This comes from someone who has covered the markets intensely for 15 years, who is continuously talking to top CEOs (who are currently scared, but are rising to the occasion on so many fronts) and enjoys that thing we all know as using common sense. I worked through the Great Recession and made the mistake of trying to pick bottoms in some stocks to no avail. I under appreciated the news flow at the time and how severe the situation was — and in the years since have vowed to dig deeper (although I no longer pick stocks for a living).

So, stop making these calls because you will cost a lot of people everything they have worked for, if you haven’t done so already. Just look at what we are witnessing in the markets people:

Look at the action in the markets and on sentiment:

  • Friday’s ugly session brought the S&P 500 below the “Christmas Eve Massacre” lows of 2,351 despite 0% interest rates from the Federal Reserve.

  • Investment banks are tripping over themselves to issue dire GDP predictions for the second quarter. What started as a shocking 12% drop predicted by Deutsche Bank a week ago has snowballed to a 24% crash pontificated by Goldman Sachs and 30% drop imagined by JPMorgan. In short, no one has a clue what the economy is doing — so how can stocks be cheap?

  • Goldman Sachs is out with a new note calling for a 123% decline in S&P 500 earnings in the second quarter. Predictions like this elsewhere on the Street lurk in the weeds.

  • Consumer staple stocks such as Coca-Cola (KO) continue to be sold off.

  • Often viewed as a safe-haven asset, gold prices continue to act very weak.

  • We can’t string two up days together in the markets despite promises of fiscal stimulus measures and 0% interest rates.

  • Stocks continue to take their cue from coronavirus infection counts. Points out EvercoreISI strategist Dennis DeBusschere, “According to investors, until cases peak, there is a pharma solution and a significant fiscal offset (in that order), volatility and correlations will remain at extremes and dire market scenarios remain on the table. Fiscal offsets bridging the gap to peak cases are incredibly important though. Otherwise, we get peak cases and a deep recession.” Well said.

  • Household-name companies such as Marriott (MAR) are furloughing thousands of workers.

  • Delta Air Lines (DLA) just guided to a $10 billion year-over-year decline in second quarter sales. That is insane. Layoffs are around the bend for the airline industry, too.

And then look at what lies ahead:

  • Dire macroeconomic releases the likes of which most in the market have never seen before in their lifetimes. The prints will probably scare people right out of any new long positions they have initiated or older holdings that have been cut by 50%.

  • An absolutely terrible earnings season starting in early April. I actually think this coming earnings season should be delayed so companies could save on reporting costs and not spark another rout in the markets. God awful earnings reports plus no guidance is a recipe for a market meltdown.

  • Rising numbers of those infected with the coronavirus.

  • Companies that have delayed layoffs are forced to layoff people in droves as business activity remains at a standstill.

  • Remember the presidential election? Yeah, there is that in November.

And don’t for a second think that a piece like this represents the market bottom or a peak in hysteria if you will. It doesn’t and you know it. The market remains in very bad shape and requires a host of things to begin to turn the corner. It needs a united government with a fiscal relief plan that is simply eye-popping. It needs human beings to get well. It needs Corporate America to lead and to not hide in a bunker because the news is tough and unfavorable.

All of this points to stocks deserving to trade much lower than their current 13 times P/E multiple before being considered cheap. Keep the superhero capes in the closet, please.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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