Here's The Chart That Has Stock Market Bears Ripping Their Hair Out

And this comes as profit growth expectations continue to come down.

"Profits are the mother's milk of stocks," says CNBC's Larry Kudlow famously. And most experts agree with him.

When stocks rise as earnings fall, this is called multiple expansion. In other words, the price-earnings ratio is expanding. In other words, stocks are getting more expensive.

Many of the stock market bears have centered their investment theses based on deteriorating fundamentals (i.e. profits and profit expectations coming down).

And while these bears have been right about profits weakening, many didn't expect investors to pay an increasing premium for stocks.

"Why has the P/E expanded?" asked Morgan Stanley's Adam Parker rhetorically. "Most likely, this reflects central banks’ aggressive liquidity injections, which have translated into an increasing conviction among investors that major tail risks have been indefinitely removed. The growing reality that there are limited investment opportunities outside of equities has fueled stronger inflows into equity markets in some regions and driven expectations of an even more substantial rotation."

Earlier this month, Parker was forced to raise his year-end target on the S&P 500 to 1,600 because his multiple assumption was too conservative.

Canaccord Genuity's Tony Dwyer, the most bullish strategist on Wall Street, recently cranked up his year-end target on the S&P 500 to 1,760 largely on the assumption of a high multiple.

Here's FactSet's John Butters discussing this phenomenon:

"In recent quarters, it has not been unusual for the value of the index to increase at the same time analysts are trimming earnings estimates for the same quarter. In fact, it has occurred in 10 of the past 20 quarters (including Q1 2013). During these ten quarters, the average decrease in the bottom-up EPS has been 2.9%, while the average increase in the value of the index has been 9.5%. These percentages are actually very similar to the percentage decline in EPS (-3.1%) and percentage improvement in the value of the index (9.6%) recorded for Q1 2013."

Here's a chart from FactSet showing how stocks rose as earnings expectations fell. This certainly has the bears ripping their hair out: