The bear market isn’t over, Citi says. Here are the signals to watch.

Well the market won’t have that May light sweet crude oil contract to kick around anymore.  Now expired, the contract’s brief foray into negative territory — it did end up above zero — has caught the world’s attention as a signal of cratering global economic demand, and not just the chaotic supply battle between Saudi Arabia, Russia and the upstart U.S. shale producers.

Against that backdrop, Citi’s global equity strategy team says the bear market, in stocks, isn’t done…

contrasting the $5.5 trillion of global central bank asset purchases over the next 12 months with the likely 50% collapse in global earnings per share over 2020.

“All bear markets include false rallies, often associated with supportive monetary policy. But markets only find a sustainable base when there are signs that cheap money is feeding through into the real economy, rather than temporarily supporting asset prices,” said the team led by Robert Buckland.

The S&P 500 SPX, +2.29%, down as much as 34% from its February highs, has climbed 22% from its late March lows.

One signal the Citi team advises not to look at are price-to-earnings ratios. During the March 2009 low, the trailing price-to-earnings ratio did fall to 9 times earnings, but in the 2000-03 bear market, the trailing P/E ratio was 21 at the bottom. Measuring prices against a 10-year average of EPS, known as the CAPE ratio, gives similarly confused results.

The Citi team is looking at four things — purchasing managers indexes, infection data, earnings revisions from sell-side analysts and credit spreads. New daily cases are coming down, and credit spreads have tightened, though it is worried if central bank intervention is enough to keep spreads tight when default rates inevitably rise.

The sell side earnings estimates are still too high, with consensus forecasting just a 10% drop in EPS, the Citi team adds. PMI data is due for release on Thursday, with expectations of a drop in the flash U.S. manufacturing PMI to 38.5 from 48.5, according to a FactSet-compiled consensus.

When the recovery does come, the Citi team expects the market rally to be V-shaped and led by cyclical stocks. And it advises buying the dip.

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