Explosions at the Boston Marathon Accelerate the Plunge of Global Stock and Commodity Markets; Money Flows to Treasury Bonds

The afternoon explosions at the Boston marathon precipitated a second wave of selling in the financial markets. The largest losses today were in sectors related to natural resources, such as gold and energy. The currently most out-of-favor international markets are Latin America and Eastern Europe. The top gainer was the Fidelity Spartan Long-term Treasury Bond Fund (FLBIX, change: 0.77%).

The greater than 10% drop in the gold sector is an unusually large sell-off that have not been seen in recent years. Gold is highly oversold now and ripe for a relief rally, but we continue to caution investors to stay away from this volatile sector.

Fidelity funds with the largest drops in today’s session:

Fidelity Select Sector Funds Change
Fidelity Select Gold (FSAGX) -11.38%
Fidelity Select Natural Resources (FNARX) -5.27%
Fidelity Select Energy Services (FSESX) -5.07%
Fidelity International Funds Change
Fidelity Global Commodity Stock (FFGCX) -5.44%
Fidelity Latin America (FLATX) -3.70%
Fidelity Emerging Europe, Middle East (FEMEX) -3.27%

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

Bear corner: the energy and natural resources sectors have entered a downtrend

The momentum of the bull market of the first quarter of 2012 was interrupted in the first few days of the second quarter. We reported earlier that the energy and natural resources sectors have pulled back into bearish territory. It is worrisome for us to see natural gas and other commodity stocks also entering a downtrend. Should additional key sectors pull back, we would see an increased risk of a market correction or reversal.

FFGCX chart

Fidelity Global Commodity Stock fund (FFGCX, last change: -0.48%)


FSNGX chart

Fidelity Select Natural Gas fund (FSNGX, last change: -0.70%)


Technical analysis screens are provided by FidelitySignal.com