Wall Street's biggest bear explains what needs to happen for the stock market to avoid a 23% correction

• JPMorgan's Marko Kolanovic expects the S&P 500 to fall 23% by the end of 2024.
• Kolanovic lays out what needs to happen for stocks to avoid this grim outcome. 
• Other strategists have turned more bullish recently as the market powers on to new records.

Wall Street's biggest bear isn't budging on his dour outlook for the stock market even as the major indices continue to hit record highs.

But JPMorgan chief global markets strategist Marko Kolanovic is offering investors a "what could go right" scenario that would prevent his bearish outlook from coming to fruition.

Kolanovic has a 2024 year-end S&P 500 price target of 4,200, which represents potential downside of 23% from current levels as well as the lowest price target on Wall Street.

"Our cautious stance has been based on our view that there is no re-rating upside, and that any upside had to therefore come from earnings growth, which we see being insufficient to take on equity risk even under best case scenario assumptions," Kolanovic said in a note on Monday.

Kolanovic has forecasted subpar earnings growth for the S&P 500, suggesting the index's earnings per share will only be $225 in 2024 compared to $221 in 2023.

That is well below Wall Street forecasts of $240 per share and below the S&P 500's trailing 12-month earnings per share of $228 per share, according to data from Bloomberg.

Here's what has to happen for the stock market to avoid a 20% sell-off, according to the note.

"For equities to avoid a 20%+ correction, you have to believe that tech will become a much more meaningful driver of growth for the broad economy in short order," Kolanovic said.

But Kolanovic is not buying that bullish outlook and instead recommends investors stay patient before putting cash to work.

"While we believe tech will continue to be the key driver of economic growth for years to come, we don't think its impact on corporate P&Ls across the board will be that profound so suddenly, and so we remain cautious here, expecting economic growth to weaken, equities to correct, and investors to find a better entry point," he wrote.

Kolanovic's bearish position on the stock market wasn't always so lonely, but recently a chorus of more bearish stock strategists have changed their tune.

On Monday, Evercore ISI strategist Julian Emanuel increased his S&P 500 price target to a street-high 6,000 from his prior target of 4,750, representing a 26% swing.

Last month, Morgan Stanley CIO Mike Wilson, who had long held a bearish view of the stock market, turned bullish and increased his S&P 500 price target to 5,400 from his prior target of 4,500.