Gold is no longer a hedge against stock market volatility

The Fidelity Select Gold fund (FSAGX, change: -3.68%) dropped into bearish territory as the gold bullion sold off on high volume.

The Fidelity Select Gold fund (FSAGX, change: -3.68%) dropped into bearish territory today, as the gold bullion sold off on high volume mirroring the sell off in global equities. In the last three months, gold investments did not offer a hedge against stock market declines.

Sector rotation continues

Yesterday’s winners continue with big moves today. The top gainer Fidelity funds were the Fidelity Select Electronics (FSELX, up +2.90%), the Fidelity Select Computers (FDCPX, up +2.34%) and the Fidelity Select Air Transportation (FSAIX, up +2.14%) funds.

Do these moves represent a bear market rally or a true change in the trend? We’d like to see these funds clearing the 100-day moving average before we can believe that a new bull market is about to start. FSELX has the best chance at this point to enter a bullish uptrending phase.

The weakest Fidelity sector fund was the Fidelity Select Gold (FSAGX, down -1.72%) fund today. It pulled back to the top of the previously held trading range, which can act as a support level. Moving below this support level, however, would not be bullish for gold stocks.

Mutual fund screens are provided by FidelitySignal.com

Gold stocks break out of trading range

We’ve been tracking gold stocks for some time and the breakout happened today, following a 3.02% move in the gold bullion (GLD).

SPDR Gold Shares (GLD) up 3.02%

SPDR Gold Shares (GLD) up 3.02%

The Fidelity Select Gold (FSAGX) fund is up 1.64% today and broke out of its trading range

The Fidelity Select Gold (FSAGX) fund is up 1.64% today and broke out of its trading range