Myth: Last Friday, the percentage of S&P 500 (SPX) components making a new 52-week high surged from 0% to 22% in less than two weeks, but is was led by the defensive sectors of Utilities, Consumer Staples, and Health Care with an average of 40% of each sector making a new 52-week high vs. just 18% for the other sectors. In theory, investors should want to see the more cyclical sectors doing better because it would be considered a sign of economic vitality, and such defensive leadership might suggest a pending economic recession and associated bear market. Let’s see if the data supports this view.

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