There’s been so much winning lately that it’s almost hard to keep track.
Stocks have been posting historic numbers year after year, and 2026 has picked up right where the last few left off.
At the same time, something interesting is happening beneath the surface.
Consumer sentiment is collapsing to historic lows. People are angry, frustrated, and convinced things are falling apart.
That combination matters.
Because while consumers are more pessimistic than ever, consumer stocks are doing the exact opposite.
They’re breaking out to new all-time highs on both a market-cap and an equally weighted basis.
It’s easy to dismiss this move as being driven by a handful of mega-cap names.
Amazon (AMZN) and Tesla (TSLA) dominate the S&P 500 Consumer Discretionary Index, so that argument sounds convenient.
But even when you strip those names out entirely, the consumer discretionary group is still pushing to fresh highs.
And here’s the best part.
Consumers aren’t even optimistic yet.
So let’s talk about why all this anger and pessimism might be doing a lot more for this bull market than most people realize.
Their Anger Is Fuel for the Bull
If everyone were happy and confident that the world was a great place and making money was easy, that would be the real problem.
That’s what markets looked like in 1999, right before everything fell apart.
That’s what they looked like in 2019, just before we went on to experience three major corrections, including a full blown bear market and a historic crash.
Peak optimism does not show up at healthy moments.
So if you’re rooting for consumers to feel confident, it probably means you’re short stocks. Or you haven’t bothered to study market history.
The reality is much more constructive.
Consumer sentiment is sitting at the most pessimistic levels on record, and that’s a good thing if you own stocks, which of course we do (it’s a bull market).
What makes this even more powerful is what’s happening at the same time.
In the face of historic pessimism, consumer stocks continue to push to new all-time highs.
Here’s the S&P 500 Consumer Discretionary Index breaking out to record levels on a market-cap weighted basis:
The equally weighted version of the index is also at the highest levels in its history.
This is not a narrow move.
This is a broad consumer rally occurring while consumers themselves have never been more pessimistic.
Perfect.
It’s the Little Guys Too!
Here’s the part that really matters.
Yes, the big-cap names are making new highs. But the move doesn’t stop there. The mid caps and small caps are right behind them.
This isn’t one of those markets where only a handful of stocks carry the entire group, like we saw in the late 1990s. This is participation.
Even if you completely remove the largest names from the sector, with Amazon and Tesla alone accounting for more than 43 percent of the index, the consumer discretionary is still breaking out to new all-time highs.
And when you move down the market-cap spectrum, the picture only gets better.
The mid-cap and small-cap consumer stocks are working through massive multi-year bases and are now attempting to break higher as well:
This has all the ingredients of a perfect storm. Strength at the top. Strength beneath the surface. Broad participation across the entire group.
At the same time, consumers themselves don’t believe it.
They’re too busy complaining about the labor market, inflation, and government shutdowns.
Good.
That’s how bull markets stay alive.
So by all means, stay angry. Keep complaining.
All that pessimism is just more fuel for consumer discretionary stocks to keep driving the market higher.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs