It seems logical to conclude that the recent drop in consumer confidence bodes ill for stocks. But that’s not the case, says Bloomberg columnist John Dorfman.

He cites data from Ned Davis Research showing that when consumer confidence is at its worst, stocks do best.

In that case, the plunge in the Conference Board’s Consumer Index during July is something for stock investors to cheer. The index hit a five-month low of 50.4, compared to 54.3 in June.

The Ned Davis study shows that when the index is above 113, the Dow rises an average of only 0.2 percent over the next 12 months, writes Dorfman, chairman of Thunderstorm Capital.

When confidence is between 66 and 113, the Dow gains 5.9 percent. And when the index  is below 66, the Dow soars 13.1 percent.

So how do you explain this?

“When confidence is low, many people have withdrawn from the stock market, whether because of fright, disgust or simple lack of funds to invest,” Dorfman writes.

“Lots of cash is on the sidelines, and that cash is potential fuel for a rally.”

Whatever the influence of consumer confidence, there is no shortage of stock bulls in the investment community now.

Robert Doll, chief equity strategist at BlackRock, sees a good chance for stock gains.

“People have been pleasantly surprised by how good earnings have come through, despite the weak-ish economy." he told CNBC.