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Monday - Friday, 5:00 - 6:00 PM ET A major Wall Street firm is on correction watch.

Despite the latest market bounce, Morgan Stanley's Mike Wilson is bracing for an S&amp;P 500 decline of at least 13% between now and September.

Wilson cited technical headwinds on CNBC's &#34;Fast Money&#34; on Monday.

&#34;It does have all the hallmarks of what I would call a bear market rally,&#34; said the firm's chief U.S. equity strategist and chief investment officer. &#34;Things got oversold.&#34;

He also singles out the tech-heavy Nasdaq, which rallied almost 2% on Monday. It's up more than 13% over the past three weeks.

&#34;The Nasdaq has run into resistance again here.... throwing back into the 200-day moving average,&#34; Wilson added. &#34;It's a good time to remain defensive because, look, we're late cycle.&#34;

He has been worried the inflation surge and Federal Reserve's tightening policy increases recession risks. It could create an environment, according to Wilson, where stocks perform worse than bonds.

&#34;We don't think there's a recession this year. But maybe next year there could be one,&#34; Wilson said. &#34;So, the markets are going to trade defensively.&#34;

Wilson, the market's biggest bear, believes the S&amp;P 500 will ultimately end the year at 4,400 — about a 9% drop from the index's all-time high hit on Jan. 4.

'We're doubling down on defensives' &#34;We're doubling down on defensives,&#34; Wilson wrote in his Monday research note. &#34;Growth is becoming the primary concern for equity investors rather than higher rates.&#34;

Wilson's market playbook includes utilities, consumer staples and health care to outperform.

On &#34;Fast Money&#34; last winter, he also touted the merits of stock picks with defensive qualities and a burst below 4,000.

&#34;I need something below 4,000 to get really constructive,&#34; said Wilson on Jan. 24. &#34;I do think that'll happen.&#34;

Now, he's open to toning down his bearishness if the Fed doesn't raise rates as fast or as hard.

&#34;That's probably off the table given the inflation that's out there,&#34; noted Wilson. &#34;But that would be a real elixir that would allow the markets to probably go a little bit further.&#34;

He also lists better-than-expected earnings as a potential upside wildcard. First quarter earnings season begins a week from Wednesdays.

&#34;If we're going to be wrong, it's going to be on earnings. It's not going to be because financial conditions loosen up again,&#34; Wilson said. &#34;It's going to be because earnings don't disappoint as we're expecting as we go through the year.&#34;

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<p>Despite the latest market bounce Morgan Stanley's Mike Wilson is bracing for an S&P 500 decline of at least 13% between now and September.</p>

'Bear market rally' is setting stage for a correction, Morgan Stanley's Mike Wilson warns