The Defense Sector Lags the Market

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

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