Most hated bull market? Maybe it should be

While the rally this year looks good on paper, it has come on the backs of some of the ugliest internals you could imagine.

By MSN Money Partner Jul 9, 2013 4:35PM

Bull © Photographers Choice RF, SuperStockCNBCBy Jeff Cox


If this is the most-hated bull market ever, as has been suggested, maybe there's good reason for it.


While the rally this year looks good on paper -- as any 15% S&P 500 ($SPX) gain by early July would -- it has come on the backs of some of the ugliest internals you could imagine.


Just look at the qualities the biggest gainers share: Low price-to-earnings ratios, zero dividend yields, high short interest and lowest analyst ratings.


It's not exactly a market that would win any beauty contests.


In fact, its best chance would be at a county farmers fair, for "ugliest bull." And it's hard to love an ugly bull.


Jeffrey D. Saut, chief investment strategist at Raymond James, said he is mindful of the old market adage, "When they start running the dogs, it's time to start looking over your shoulder." Saut believes the market is a week or two, at most, away from the first "meaningful decline of the year to commence."


While the S&P 500 shed about 5% in the immediate aftermath of Federal Reserve Chairman Ben Bernanke's warning, that extreme monetary easing is about to unwind, the stock market index has erased all but 15 points or so of that decline.


The quality of the rally -- on low-quality stocks -- as well as the weak earnings season prospects and discord in Washington over sequestration spending cuts and the debt ceiling, could spell market trouble, Saut said.


Bespoke Investment Group breaks out the S&P 500 in ten 50-stock groups, and breaks down their performance by type.


Among its findings:

  • The 50 biggest stocks gained 13.3%; the 50 smallest stocks surged 21.9%.
  • The 50 stocks with the lowest P/E ratios rose 26.7%; the 250 with the highest P/E ratios were up far less.
  • Stocks with no dividend yield gained 19.9%, outperforming the high dividend-yielders, particularly as interest rates rose.
  • The 50 stocks with the weakest analyst ratings surged 22.7%.

Sound bad?


Actually, there might be some love out there for the ugly bulls stampeding through Wall Street. Jim Paulsen, the chief market strategist at Wells Capital Management, said the high-beta qualities of the best performers are exactly what you would expect of a market getting its mojo back after years of no confidence.


"The stuff you just named coming into leadership is the essence of confidence. When confidence emerges everything you just listed would be at the top of your list to buy," Paulsen said in a phone interview.


"What this rally's about -- even going back to last fall -- is about giving up the Armageddon ghost and accepting that this is a more sustainable recovery," he added. "If you suddenly developed confidence in sustainability you wouldn't latch onto low-beta high-dividend stocks. You'd put on a little octane."


That octane, though, looks like it's fueling a lot of old junkers.


More from CNBC

Tags: $SPX
Jul 9, 2013 5:09PM
Hate is not quite the right word. I would say "Distrustful". Certainly retiring Boomers don't hate it. QE has kept the market up in circumstances that would normally be more Bearish. Retiring Boomers reap the benefit. Day traders make there share. Bankers are holding the hot potato and are trying to get the media to convince John and Jane Doe to take them off it.
Jul 9, 2013 5:09PM
No, this market is just about money printing. Once it´s gone, it will tank.
Jul 9, 2013 11:06PM
 obama will be the messiah to resurrect America.

not a Bush fan, but this country is toast with this administration
Obama is Bush on Steroids

Jul 9, 2013 6:29PM
Why is it strange that low PE companies are up the most. Isn't that logical?

Jul 9, 2013 5:59PM
Interesting cliff hanger leaving us wondering what those old junkers are.  

"We gotchyur friggin' Edsel stock here!  Peanuts, popcorn and Edsel stock.  Step right up."
Jul 9, 2013 6:04PM
Hate is clearly the wrong word. I however doubt you can find many that Trust this Market as long as the Global Feds are engaged in printing Trillions in Fake Money. There literally is no true Price Discovery. That hardly means you can't invest or from my point of view, strictly trade. What it does mean, folks need to have hair trigger response times because almost everyone knows the Global Feds cannot play this Alice in Wonderland Game Forever. There will be a day of Reckoning. There always is when Scams of this magnitude take place.

Jul 9, 2013 11:19PM

I've never really said I'm a big fan of Obama...But what we had in the past was a POS...

This guy just doesn't have any balls...

And Congress, mostly House and Teapartiers are only worried about taking everything over and getting total control back...They have shot themselves in both feet..


BTW...To someone else Obama, did not stop the K-pipeline, that only shows how really ignorant you are..As far as shovel ready jobs and infrastructure..Who allocates that money?..CONGRESS stupid.

Not really sure if 787 billion was approved "all" under Obama's watch ??

But I'm pretty damn sure more drilling permits, exploration and auctions have been issued or permitted by Obama's Admin. then all 8 years under the dumbazz...He had Saudi friends, remember..

Jul 9, 2013 7:01PM

Crazy I only need to hold One or Two people accountable for the mess our Country got into in 2007-2008....NO ONE ELSE...!!...And previous years before that.


If that was the Case, all the Right Wingers, Republicans and Conservatives wouldn't really be able to Blame Obama today, would they...?

You can't have your Cake and eat it too.And you can't have it both ways to your advantage...

Not on my Watch. 

Jul 9, 2013 6:28PM

Crazy,Crazy,Crazy...When you gonna fess up and admit, THAT IT WAS Georgie Boy Dubba Bush.

That took away all your freedoms and destroyed Constitutional Law...

Then accused people like me of not being a Patriot, because I didn't go along with him and Cheney.


He was a fkin loser at everything he touched in life, a draft dodging fraidy cat that went AWOL.

But a killer of Babies, Children, Women and Innocent Citzens..

And a piss poor President, that came from a piss poor State. That wanted to get rid of him, so they could pull his puppet strings somewhere else and get paid back..

What a friggin LOSER....and LIAR....The only way History will remember him. 

Jul 9, 2013 10:49PM

Bush and his cronies ran us into a goddamn ditch that will take us 10 years to get out of...

Along with it ,also other World Economies were dragged down further..

Bush and his Administration, were held in contempt by many other Nations, including many of our Allies...

We as Americans were dragged down to low esteem in the eyes of others and disdained.

What part of that don't some morons understand.

Jul 9, 2013 10:41PM

Damn funny how you pick at the god the Republicans and Conservatives sucked the titi of....

And they just go over the edge with blind racist hate in many cases...

Hardly being a liberal, and certainly not non-patriotic...

I start ROTFLMFAO....With some of the stories they try and make up, to back up lies or what they call facts from their un-named sources, that they consider the only truths available...


What a fkin bunch of cretins and morons, just like their past imbecillic leader.

I suppose next you'll start rambling on about Reagan too.

Jul 9, 2013 5:14PM

If Obma was 100% white and a Republican the righties would be in love with the

market.If you listen the the hateful Repubs on Fox you`ll think the Dow was at 2,000.

Their jealousy is overwhelming.

Jul 9, 2013 6:55PM

Yup....I think that's logical....Usually works that way.


Add up the appreciations and dividends, and most are winners.

Jul 9, 2013 5:58PM
Crazy8s;You`re lucky you don`t live near me.I`ld drop kick you all over the parking lot.
Jul 9, 2013 5:31PM

Gonna beat that "Obama is a Failure" horse right into the ground aren't ya?  well... knock yourself out- the rest of us are recovering and doing just fine...all the rhetoric in the world doesn't change what the common man on the street already knows- WE HAVE RECOVERED.  Sorry you're late to the party!

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