Three reasons why bull market is alive and well

Published Mon, Jun 22 201512:59 PM EDT

Two weeks ago, the Dow Jones industrial average turned negative for 2015 and some investors began to speculate as to whether this would be the year when the bull market ends. Since then, stocks have marched higher as the Federal Reserve gave more of a dovish tone on interest rate hikes and Greece appeared to make some concessions to creditors. Also behind the rally: a number of Wall Street strategists came out in defense of the bull market. Among this group, here are the three most common reasons why the advance is alive and well and some ways they said to play it. One of the reasons is last week's breakout of the small-cap Russell 2000 index , which is often viewed as a barometer of higher risk tolerance and has historically been correlated with gains for the S & P 500. "A Russell 2000 breakout has been usually followed by above-average S & P 500 performance, not a major top," wrote Ari Wald, head of technical analysis at Oppenheimer & Co., in a note to clients Monday. The Russell 2000 hit an intraday high Monday and closed at a record last week. According to a study by the investment firm, since 1979, small-cap breakouts that show similar patterns as the one last week, have been followed by an average gain of 7.9 percent by the S & P 500 over the next six months and 15.6 percent within a year. So far this month, the small-cap index is leading the way among the major averages with a return of 3.4 percent, putting its performance for the year at 7 percent, compared with a gain of 3 percent for the S & P 500. Source: FactSet Citibank sees U.S. stocks as "modestly undervalued on a variety of metrics." Strategist Tobias Levkovich looks at the price of the S & P 500 relative to earnings versus the yield on Treasurys. The method basically takes the inverse of the market's price-earnings ratio to get a so-called earnings yield. Said Levkovich: "The normalized earnings yield gap analysis ticked up and stands at 1.59 standard deviations below its 40-year average yielding a 96 percent historical probability of market gains in the next 12 months." The firm also notes credit conditions remain favorable in the U.S. for the most part, while positive trends in hiring, a boom in M & A along with intentions to increase capital spending are all bullish for stocks. "We remain generally constructive longer term while advising investors to buy on weakness rather than chasing the tape," recommended Levkovich, who has an overweight rating on banks, software services, tech hardware and real estate. Read More Charts: Biotech bull market intact "Despite some investor perceptions, bull markets do not simply die of old age or at some above-average valuation level," said Brian Belski, chief investment strategist at BMO Capital Markets, refuting assumptions that this six-year bull market may end just because of the run it's had. "The longer-term economic picture appears to remain intact," Belski added, with four of the most important economic indicators tracked by his firm trading "nowhere near levels that would signal a recession." For example, jobless claims are at the lowest level in 15 years, while consumer confidence last week recorded one of the best readings since the economic recovery began in 2009. The money play: In accordance with a bullish stance on the market, Oppenheimer's Ari Wald identified a group of stocks the firm believes could be set to rise. Below, CNBC Pro highlights 10 of those names.

Traders on the floor of the New York Stock Exchange.

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Two weeks ago, the turned negative for 2015 and some investors began to speculate as to whether this would be the year when the bull market ends.

Since then, stocks have marched higher as the Federal Reserve gave more of a dovish tone on interest rate hikes and Greece appeared to make some concessions to creditors.

Also behind the rally: a number of Wall Street strategists came out in defense of the bull market.

Among this group, here are the three most common reasons why the advance is alive and well and some ways they said to play it.