After three consecutive years of record-breaking gains for U.S. stocks, a lot of people have reached the same conclusion:
A major bear market has to be next.
I think everybody’s wrong.
That’s not how markets actually work.
We’ve already lived through multiple resets this decade. A historic selloff in 2020. A brutal drawdown in 2021-22.
And, depending on how you measure it, another meaningful reset just last spring.
Markets don’t follow a neat alternating pattern of “good years” and “bad years.” They move through trends, rotations, and periods of digestion.
So instead of guessing what should happen next, I prefer to do something far more useful: look at what’s actually happening right now.
With the month behind us, it’s time to go sector by sector through the U.S. stock market and ask a simple question: Are the groups that matter most going up, going down, or going sideways?
This is a weight-of-the-evidence approach. No predictions. No narratives. Just price, trends, and confirmation.
Let’s take a look.
Sector by Sector Analysis
Stocks around the world continue to move higher. Asia, Latin America, Europe, and even Africa are all pushing to new highs.
Now let’s bring the focus back to the United States and see whether U.S. sectors are confirming that global strength, or whether any meaningful deterioration is starting to appear.
We start with Financials, because bull markets do not exist without them. This group just closed the month at the highest level in its history:
Industrials are next. Historically, Industrials have the highest correlation with the S&P 500 of any sector.
With that in mind, Industrials also just closed the month at an all-time high:
Technology carries the largest weighting in both the S&P 500 and the Nasdaq 100.
Tech closed at a new all-time high in October, then spent the past two months correcting while other sectors carried the market higher.
Despite that pause, the primary uptrend in Technology remains intact:
Communications is showing a very similar pattern. The sector closed at new all-time highs in September and has spent the last few months consolidating those gains.
Large-cap Communications remains closely tied to Technology, with Alphabet (GOOGL) and Meta Platforms (META) still carrying significant weight, and Netflix (NFLX) not far behind.
The uptrend remains intact and the sector sits just pennies below another record high:
The Consumer matters as well. Roughly 70% of U.S. GDP comes from consumer spending, which makes Consumer Discretionary one of the most important groups to monitor during a bull market.
Like Technology and Communications, Consumer Discretionary closed at new all-time highs in September and October and has spent the last two months consolidating.
The uptrend here remains intact:
Healthcare also continues to strengthen. The sector finished November just shy of a new all-time high and closed December right back at those levels.
Healthcare’s uptrend remains firmly in place, and it’s setting up to be a potential leader in 2026:
Sector rotation is the lifeblood of a bull market, and not every group needs to move at the same time. Some sectors have lagged while building long bases.
Materials are a good example. The sector has been consolidating for roughly four and a half years. This is not a downtrend.
It’s a large base within a longer-term structural uptrend that’s setting the stage for a fresh breakout:
Energy tells a similar story, but on an even larger time frame. Instead of a four-year base, Energy has been consolidating since the summer of 2008.
That’s more than 17 years of digestion, creating the conditions for a potentially historic breakout in 2026:
The sectors we just walked through account for more than 90% of the S&P 500, 94% of the Nasdaq 100, and 95% of the Dow Jones Industrial Average.
Get the direction of these sectors right, and you’re going to get the market right.
You Be the Judge
We just walked through the sectors that actually drive the U.S. stock market.
Now ask yourself a simple question: Are those trends up, down, or sideways?
The answer is clear. Almost all of them are up. And the few that are not have spent years building bases that position them for powerful moves higher.
To me, that means the risk for equities is higher prices, not lower ones.
That will change at some point. It always does. Every major market correction is preceded by visible deterioration in key sectors.
This is not that environment.
This is a structural bull market.
Yes, it is a new month, a new quarter, and a new year.
But changing the calendar does not change the trend.
The trend in the United States is up, just like it is across the rest of the world.
And history is clear. In environments like this, it pays far more to be owning stocks than to be selling them.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs