Select Materials Fund Shows Negative Relative Strength

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

 

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