Fidelity China Region Fund is the Top International Investment

September 6, 2014

During the last market correction in late July we observed that the Fidelity China Region Fund (FHKCX) held up the best during the sell off and may continue to do well in the fall. Indeed, FHKCX continued its bullish trend into September and now ranked the top-performing Fidelity international fund by FidelitySignal.com.

fhkcx

 

.


Large Price Drop of Multiple Fidelity Funds is due to Capital Gains Distribution

September 6, 2014

Investors may have been alarmed by the large price drops of several Fidelity funds at the end of the Friday trading session. The drop in the net asset value (NAV) of these funds was largely due to the distribution of capital gains, which happens periodically. For more details click here.

Here are a few examples of Fidelity funds with large price drops:

fbgrx

flpsx

frifx

 

Buy and sell signals for Fidelity funds are available at FidelitySignal.com

.

 

 


The Fidelity China Region Fund and the Spartan Long Term Treasury Bond Fund Show the Best Relative Strength in the Aftermath of the Market Sell Off

August 1, 2014

Yesterday, the sharp stock market sell off spooked many investors. Several equity sectors were down more than 2% and the selling was broad-based. The cause of the sell off was a combination of mixed signals about the U.S. economy and the increase of geopolitical risks in Argentina, the Ukraine and the Middle East.

fusex

While equities closed lower again today, the late afternoon rally increased the likelihood of the return of a more stable market next week. The Fidelity China Region Fund (FHKCX) held up the best during the sell off and may continue to do so should the equity sell of resume in September. The FHKCX chart shows that the strong bullish trend is still intact and the relative strength vs. the S&P 500 continued to increase during the sell off.

fhkcx

Treasury bonds often serve as safe haven in volatile markets. It is widely expected that interest rates will rise in the near future, which should cause the price of long-term Treasury bonds to fall, not to rise. Consequently, a continued bull market for Treasuries may serve as a cautionary signal for equity investors (see Spartan Long Term Treasury Bond Fund chart below). Also, we are approaching the seasonally weak September-November period when most of the market crashes occurred. Taken together, the market action should caution investors to steer away from high risk investments until conditions stabilize.

flbix

Buy and sell signals for Fidelity funds are available at FidelitySignal.com

.


Select Materials Fund Shows Negative Relative Strength

August 1, 2014

The stock market sell off yesterday caused all Fidelity select sector funds to decline. As we approach the often volatile fall season we are not surprised to see investors reducing “risk on” investments. To identify the weakest sectors we use relative strength that measures the performance of a given investment compared to the S&P 500 index.

One of the weakest Fidelity funds based on this measure is the Select Materials Portfolio (FSDPX). The top panel of the FSDPX chart below shows that the relative strength is declining at an accelerated pace (see blue line). This suggests that the net asset value of FSDPX can decline more rapidly than the equity market in case of a continued sell off.

fsdpx

Buy and sell signals for Fidelity funds are available at FidelitySignal.com

 

.


The Defense Sector Lags the Market

July 25, 2014

The earnings season often brings volatility for equities, but this summer the bullish trend stayed uninterrupted for the S&P 500 index. The benchmark Fidelity Spartan U.S. Equity Index Fund (FUSEX) has gained an impressive 5.85% return in the last three months:

fusex

The Fidelity Select Defense/Aerospace Fund (FSDAX) is the weakest performing Fidelity fund with a -2.63% year-to-date return. The chart below shows that the relative strength of this sector has been declining since the January correction. The chart pattern is negative, as well. We would avoid investing in this sector until FSDAX regains its momentum and moves above the 100-day moving average line.

fsdax


Gold Stocks Enter a New Bull Market

July 11, 2014

After reaching a multi-year low a year ago, the Fidelity Select Gold Fund (FSAGX) has now decisively advanced past a treacherous up and down trading range and started the initial stage of a potentially long-term new bull market.

The first rally came in August 2013, which signaled the end of the bear market for the gold sector. However, prices unexpectedly reversed the bullish trend in September following the highly publicized selling of gold assets by hedge funds, which also coincided with low inflation expectations.

In December, gold stocks revisited the June lows, but were able to hold this level creating a chart pattern that is known as the double bottom. From the December low the sector rallied strongly and has been making higher highs and higher lows, which is one of the hallmarks of a bullish trend. As the result, the Fidelity Select Gold Fund (FSAGX) is the best performing Fidelity mutual fund so far in 2014 with an outstanding 35.11% return.

We must caution investors that the gold sector can be highly volatile and investing in gold stocks is often regarded as highly speculative. Investing in the broader natural resources sector provides more diversification and may be more appropriate for a conservative portfolio (read more on the Fidelity Natural Resources Fund).

fsagx

See more portfolio strategies at FidelitySignal.com

.


The Dow Jones Industrial Average Index cannot Hold the 17,000 Level; Biotech Sector Shows Signs of a Possible Correction; Real Estate Stocks may be Ready for a New Rally

July 8, 2014

Ahead of the July 4th holiday, the Dow Jones Industrial Average briefly reached the all-time high 17,000 level, but was not able to hold it this week. The chart below shows that the Dow is still in a bullish uptrend, but what makes us concerned is the more severe sell-off in market leading sectors, such as biotechnology.

We are also approaching the seasonally weak fall period. Since many of the infamous stock market crashes occurred between September and November, we caution our readers to be increasingly careful with committing new funds to “risk on” investments.

indu

The biotech sector has been one of the market leaders in the last 18 months. The chart shows that the sector corrected hard from the March highs in April and May, but was able to rally back in June. The large 3.14% drop of the Fidelity Biotechnology Fund (FBIOX), which is the largest biotechnology fund available to investors, is concerning, because it may signal the start of a market correction.

fbiox

While aggressive equity sectors got hit hard today, long-term Treasury bond rates trended lower, which helped interest rate sensitive investments to go higher. One of our current favorites in this space is the Fidelity Real Estate Portfolio Fund (FRESX). FRESX was one of the few Fidelity funds that posted a gain today and we would not be surprised to see FRESX to hold its current bullish trend even if stock market conditions weaken.

fresx

Buy and sell signals for Fidelity funds are available at FidelitySignal.com

.

 

 


Follow

Get every new post delivered to your Inbox.

Join 35 other followers