The Stock Market is Climbing the Wall of Worry, Part 4: Some Sectors Are Overbought Now; Market Correction is Increasingly Likely

The stock market has an excellent start in 2013 with almost all Fidelity diversified, sector and international funds showing a nice gain. We followed the buy opportunities in our blog throughout November and December of 2012. Indeed, investors were well rewarded for investing early in the bullish rally.

We must warn however, that some sectors are now becoming increasingly overbought and are vulnerable to a pullback. Additional risks include volatility that is often associated with earnings seasons and the proximity of the deadline for the budget ceiling negotiations in Washington.

We would not commit new money to buy mutual funds at this point, as the likelihood of a market correction has increased.

Fidelity Select Automotive Fund (FSAVX, last change: 0.85%)

The Fidelity Select Automotive Fund (FSAVX, last change: 0.85%) is the highest ranked Fidelity mutual fund in our momentum screen with a 21.23% three-month return.

 

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

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