Speculative, expensive and beaten down; meet the stock market's new leadership

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The middle of June marked a turning point for the stock market and new leadership has emerged for the recent run-up, according to Credit Suisse.

Driving returns have been stocks that are Speculative (high correlation to Bitcoin (BTC-USD)), Expensive (high P/E), Beaten Down (52-week drawdown), Volatile (high correlation to falling VIX (VIX)) and Highly Shorted.

The S&P 500 (SP500) (NYSEARCA:SPY) is up about 10% since the middle of June. During that time Speculative stocks have seen the best equal-weight return at 16.8%, closely followed by Expensive, up 16.6%. Beaten Down stocks posted a return of 14.6%, Volatile rose 14.1% and Highly Shorted stocks had a return of 10.3%.

“With commodity prices falling and economic data softening, inflation is projected based on both breakevens and economist forecasts to steadily decline over the next 24 months,” Credit Suisse’s equity analysts wrote. “We believe this will lead the Fed to pivot toward more dovish policy as we move toward the latter part of the year, supporting a continuation of the market’s current rally and factor leadership.”

Here are the top 50 stocks exposed to those factors:

  1. Ceridian (CDAY): Spec, Exp, BD, Vol, HS
  2. American Airlines (AAL): Spec, Exp, Vol, HS
  3. Generac (GNRC): Spec, BD, Vol, HS
  4. Carnival (CCL): Spec, BD, Vol, HS
  5. Caesars (CZR): Spec, BD, Vol, HS
  6. Etsy (ETSY): Spec, BD, Vol, HS
  7. Nowegian Cruise (NCLH): Spec, BD, Vol, HS
  8. Penn National (Penn): Spec, BD, HS
  9. Salesforece (CRM): Spec, Exp, BD, Vol
  10. Intuit (INTU): Spec, Exp, BD, Vol
  11. Paycom (PAYC): Spec, Exp, BD, Vol
  12. Las Vegas Sands (LVS): Exp, BD, Vol
  13. PVH (PVH): Spec, BD, Vol
  14. Royal Caribbean (RCL): BD, Vol, HS
  15. Tesla (TSLA): Spec, Exp, Vol
  16. Wynn Resorts (WYNN): BD, Vol, HS
  17. DexCom (DXCM): Spec: Spec, BD, Vol
  18. Cadence Design (CDNS): Spec, Exp, Vol
  19. Enphase Energy (EPH): Spec, Exp, Vol
  20. EPAM Systems (EPAM): Spec, BD, Vol
  21. Fortinet (FTNT): Spec, Exp, Vol
  22. Monolith (MPWR): Spec, Exp, Vol
  23. ServiceNow (NOW): Spec, Exp, Vol
  24. Nvidia (NVDA): Spec, BD, Vol
  25. PayPal (PYPL): Spec, BD, Vol
  26. SolarEdge (SEDG): Spec, Exp, Vol
  27. Synopsys (SNPS): Spec, Exp, Vol
  28. DISH Network (DISH): Spec, BD, HS
  29. Warner Bros. Discovery (WBD): Exp, BD, HS
  30. Albemarle (ALB): Spec, Vol
  31. Boeing (BA): Exp, BD
  32. Aptiv (APTV): BD, Vol
  33. Bed Bath & Body Works: BD, HS
  34. Domino’s Pizzq (DPZ): Exp, HS
  35. Expedia Group (EXPE): BD, HS
  36. Ford (F): BD, Vol
  37. Abiomed (ABMD): Spec, Exp
  38. IDEXX Labs (IDXX): Exp, BD
  39. Illumina (ILMN): Exp, BD
  40. MarketAccess (MKTX): Exp, BD
  41. MSCI (MSCI): Spec, Exp

See why the short squeeze trend is looking long in the tooth.

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