The S&P 500 index broke below its trading range Friday, which is the latest sign of the deterioration of the U.S. stock market:
Investor pessimism is driven by the slowing growth of the global economy, rising interest rates, trade wars, the Brexit negotiations, and several other geopolitical factors. We think that we are at an inflection point and crash-like conditions can develop quickly.
A worrisome sign for us is the lack of sector leadership. Gold is the only sector that shows a positive return for the last three months:
While the Fidelity Select Gold Fund (FSAGX) has outperformed recently, the chart does not show a bullish price pattern yet. FSAGX will have to break above the long-term trendline to start a new bullish trend:
On the other hand, the chart patterns of the weakest U.S. sectors, such as energy and industrials, are very negative:
In a previous article, we described the turmoil in global markets. European and Emerging Markets continued to deteriorate since then and do not offer investment opportunities at this point in our view: