An Uncertain Bull Market

By Alex Gurvich, portfolio manager at The Rockledge Group

NEW YORK ( TheStreet) -- This is an unbelievably good market, one may say. As of May 16, the S&P 500 is up 3.3% for the month and over 15.7% for the year. Just look at the numbers, the S&P 500 had six consecutive positive months and only four negative months for the past 19 months going back to October 2011. If we continue at this rate the S&P 500 might be touching 2,000 mark by the end of the year. It all looks wonderful, doesn't it?

Just a quick reality check, a year ago, the S&P 500 was up over 11% at the end of April 2012 before it dropped over 6% in May. Clearly this has not repeated itself this year, or maybe just not yet.

So what is driving this market? Let's look closely where the gains are coming from. The economy seems to be improving and the outlook seems to be getting better. So if we look at fundamental business and economic cycles we could and should presume that the growth drivers should come from the cyclical sectors that are typical outperformers during this economic growth cycle. These cyclical sectors and their tracking ETFs are Energy ( XLE), Technology ( XLK), Materials ( XLB) and Industrials ( XLI).

Below is the performance chart of these cyclical sectors, year to date. The fact is that all four cyclical sectors significantly underperformed the S&P 500.

Source: Yahoo!

Now let's look at the performance, year to date, of the defensive sectors, typically represented by the Staples ( XLP), Health Care ( XLV) and Utilities ( XLU) sectors.

Source: Yahoo!

The picture is quite telling. All three sectors, except for Utilities in the past couple of weeks, have significantly outperformed the S&P 500.

The first thing this is telling me is that this is not a typical bull market. A solid bull market should be and will be driven by the fundamental business growth and positive economic outlook and it should be driven by the growth companies and sectors they represent.

Right now it seems investors want to participate in the rally, but are certain of neither the length nor the foundation of the bull market. In other words, we want to have it both ways: safe (invest in safe sectors) and greedy (fully invest in and bid up the market). This is a very strange -- should I say unsustainable? -- bull market.

What's pushing the market is the incredible money printing machine brought to us by the Fed. While the printing machine is working the music is playing, and like Chuck Prince, the former head of Citigroup ( C), said in July 2007, "as long as the music is playing, you've got to get up and dance. . . ." The problem is that the music will stop and investors will get hurt.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.