I have a confession: I have been a stock market bear this year. “But I had a great reason,” you can hear me say.

My reason was the Earnings Recession. In the video that accompanies this article, I show the update on forward estimates that shows negative 9.4% “growth” for the first quarter and minus 4% for Q2. Even when you strip out Energy sector data, negative 4.5% earnings “growth” is the result for Q1.

I have another confession: I saw the “bear hunt” relief rally coming after the February low at S&P 1810 and I plotted the path all the way to 2040, but I wasn’t net long for the ride. Talk about fumbling an interception inside your own 20-yard line.

I even accurately predicted what is happening now: FOMO, which stands for the “fear of missing out.” When the S&P popped above 1900 last month, dips started to be aggressively bought. Why? Because long-only equity fund managers could not afford to still hold record cash allocations if the market were to break out above 1950 and head for 2000. More on this in a moment.

A Big “What If?”

The video that accompanies this article also shows my “valuation re-set” targets for the S&P 500 after we break the February lows, assuming I am correct that we do. Mind you, I haven’t been calling for a full-on bear market where stocks go down 30-40%.

I’m even inclined to be less bearish than Scott Minerd of Guggenheim who is calling for nearly a 25% re-set toward S&P 1600 , especially if the Oil Bear lays waste to energy companies, their junk bonds, and a few banks.

I don’t think that happens because the economy is chugging along just fine, like a “plow horse” as Brian Wesbury has called it for years. Slow and steady wins the day because it keeps the booms and busts away.

But as a stock market bear, I decided earlier this week that I must “sleep with one eye open” on the bull case. And the biggest argument against my Earnings Recession thesis is that it is nearly discounted in current valuations.