Is it over yet? According to Merrill's Bernstein, not yet... And it could get worse

From Clusterstock.Com (Research and Analysis, Live), posted by Henry Blodget on 27th September:  According to  Michael Bernstein, the worst is yet to come for the stock market and that the US stock market is not yet ready for a V-shaped, rapid recovery.

From Blodget's entry:

Why isn't the stock market ready to soar, now that the bailout's on its way, the DOW has declined 20%+, and cash has outperformed stocks more more than 10 years? Because:

1. Stocks are still very expensive (25X trailing earnings)
2. Analysts are still expected a v-shaped recovery in corporate earnings

In response to the Blodget's question on what's ahead and how much pain there will be in the stock market, Bernstein responds:

That's a hard question to answer, but investors who are looking for a
sharp V-shaped recovery are going to be quite disappointed. I don't see
that happening. That's because we are going through Phase I of this
process, which is the deflation of the credit bubble. Phase II is the
knock-on effects on the real economy, and we're just beginning to see
that.