The S&P 500 could be set to break out of its anemic trading range, according to a veteran Wall Street strategist.
The key metric to watch isn’t some piece of technical analysis or a big earnings update. Rather, it’s the growing feeling of economic unease among high-earning Americans, according to Jim Paulsen.
The S&P 500 is roughly flat since the start of 2026 as investors weigh the market impact of Trump’s uncertain tariff regime and AI disruption fears. Jim Paulsen, former chief investment strategist at The Leuthold Group, says his new market indicator, which he dubs the poor/rich sentiment measure, has successfully forecast recent market rallies and is signaling a potential upswing is on the horizon.
Lower-income households were seen by forecasters as a weak spot in the economy for some time, but their mood has been brightening of late. At the same time, high earners have become more downbeat. This narrowing of the sentiment gap, Paulsen says, is a buy signal.
Paulsen compares consumer confidence in the economy by income level to find a daily confidence ratio that he then combines with a ratio of Walmart’s stock performance relative to the S&P Global Luxury stock price index.
Paulsen overlaid his poor/rich sentiment indicator over the S&P 500 to assess it as an indicator for market performance.
“The Poor/Rich sentiment indicator has spiked higher 8 previous times since 2018 — in late-2018, October 2019, March 2020, May 2022, October 2022, November 2023, September 2024, and in April 2025. During each of these previous spikes in the Poor/Rich sentiment indicator, the S&P 500 was at a level which represented a good buy! “
Since the end of 2025, Paulsen’s indicator has climbed. The measure’s spike since December shares similarities with increases seen at the end of the 2022 bear market and at the 2020 pandemic lows.
The strategist ties the indicator’s success to the idea that if the high-income cohort is losing faith in the economy, then the stock market is often at a low point. Paulsen highlights a downturn in Bloomberg’s US billionaires relative total return index, which he says could be a signal that the rich are losing faith in the market.
“We seem to be in a relatively rare period when the Rich are losing confidence faster than the Poor … when the rich start complaining more than the poor, it’s often been a good time to step up and buy some equities,” the strategist said.
Paulsen warned investors against using a single gauge, but said it may be a good time to assess equity exposure.
“If you are underinvested, perhaps it’s worth considering taking advantage of recent volatility by adding to your equity exposure during selloffs,” he wrote on his Substack post.
