And for a while there, Consumer Discretionary did underperform for a bit.
We were right here talking about it all along.
But then this summer things started to change. Consumer Discretionary stocks began to confirm everything we had already been seeing in all the other sectors.
To the point where Consumer Discretionary is now a leader!
Tell that to the people who are crying about broke consumers who "can't afford to live".
We're seeing the exact opposite in the market. I love when narratives are this far removed from reality. It means the trend probably has legs.
Look at the Consumer Discretionary index making new all-time highs. And maybe more importantly, the Equally-weighted Consumer Discretionary Index is ALSO completing this multi-year base to new all-time highs:
The bottom chart completely eliminates "The Amazon Effect", which is a big driver of the chart on Top.
Remember, Amazon represents 22% of the Market-cap weighted Consumer Discretionary Index. Tesla has over a 14% weighting in the index.
The Equally-weighted index essentially takes both of these stocks completely out of the equation.
You can argue that the equally-weighted index is more important, because of the broader perspective. But we live in a market-cap weighted world, so one could also argue that the Amazon-heavy index is more important. In fact, Amazon should probably carry an even higher weighting right?
Either way, BOTH of these indexes are completing a multi-year base to new all-time highs.
This is RISK-ON behavior. And to bet otherwise is historically a very bad decision.
We're embracing the rotation and market strength.
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