An article on StockCharts recently highlighted a key market signal I’ve been watching closely: the performance of consumer discretionary stocks versus consumer staples (read the full article here). In simple terms, discretionary companies (like retailers and automakers) represent the “offense,” while staples (groceries and household goods) represent the “defense.”
Right now, discretionary stocks are strongly outperforming staples — not just in large U.S. companies, but also in small caps and global markets. That’s significant. It tells us that this isn’t just Amazon and Tesla driving the move higher; the strength is broad-based. Small-cap discretionary stocks are breaking out against staples for the first time in years, and even global discretionary companies are showing leadership. Historically, when we see that kind of across-the-board momentum, it’s a bullish sign for markets.
One of the more fascinating insights from the article is that the equal-weight discretionary index is at its highest relative level compared to staples since before the 2008 financial crisis. That suggests that strength isn’t concentrated in just a few mega-cap names, but is spread across the sector. In other words, investors are leaning into growth in a wide variety of companies — a healthy sign for the overall market.
There’s also a seasonal note worth mentioning. September is often remembered as a “scary” month for stocks, but historically, discretionary stocks have tended to do well during this period, while staples have lagged. This adds another layer of confirmation to what the ratio charts are telling us: investors are embracing offense for now.
For retirees, the takeaway is clear. Markets move in cycles, and signals like these help us determine when to lean into growth and when to shift back toward defense. This is why our Two-Sided approach matters — it allows us to participate in upside momentum like we’re seeing now, while keeping strategies in place to help protect income when conditions eventually turn.
Great Quotes
“The happiness of your life depends on the quality of your thoughts.” – Marcus Aurelius
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Banff National Park Canada
All content is the opinion of Brian Decker
