Sector Rotation: Fidelity Select Defense and Aerospace Fund

The Fidelity Select Defense & Aerospace Fund has been an outstanding investment throughout 2013 with an excellent 41.57% year-to-date return. Top holdings include defense companies, such as United Technologies (UTX), Boeing (BA) and Precision Castparts (PCP).

The chart shows that FSDAX has accelerated its momentum and now moved up to the #4 ranked position on the Top 10 Fidelity Mutual Funds list. The next few trading sessions will show how much impact the Iran nuclear deal has on the defense sector and what to expect from FSDAX, as an investment.

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

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U.S. Equities are in Overbought Territory and Vulnerable to a Large Correction

U.S. equities have been making new highs almost daily and 2013 is clearly shaping up as one of the strongest bull markets of recent market history. But how dangerous is this market for investors looking to commit new capital?

The chart below shows the 15-year performance of the Fidelity Spartan U.S. Equity Index Fund (FUSEX) using monthly bars. This long-term chart shows that the great bull market of 2013 is still intact and has advanced without any serious interruption since December 2012.

However, a closer look at the RSI indicator (a technical indicator that measures overbought/oversold conditions) on the top of the chart shows an overbought condition. While the bull market can continue its positive momentum for weeks or months, U.S. equities are increasingly vulnerable to a serious correction or even a crash.

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

Best Fidelity Mutual Fund of 2013: Select Biotechnology Fund

The S&P 500 index closed above 1,800 for the first time. The Dow also made a new high today, indicating a very bullish stock market.

The biggest gainer today was the biotechnology sector. The Fidelity Select Biotechnology Fund (FBIOX) was up 3.15% and continues to be the best performer of 2013 with an incredible 60.05% year-to-date gain. FBIOX shows a highly bullish chart pattern, since it broke through the blue resistance line.

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

Top 10 Fidelity Mutual Funds

The Dow Jones Industrial average moved above the psychologically important 16,000 level today, the first time in the history of the stock market. This is clearly a sign that the great bull market of 2013 is still intact.

As we approach the seasonally strong December, it is worth taking a closer look at where the market leadership is coming from. The table below shows the top 10 Fidelity mutual funds ranked by momentum, courtesy of FidelitySignal.com.

Top 10 Fidelity Mutual Funds by momentum

Top 10 Fidelity Mutual Funds by momentum

 

The table shows that the Fidelity Select Leisure Fund (FDLSX) is moving up the fastest in the momentum ranking. In addition, FDLSX had the largest gain today out of all Fidelity mutual funds. The ranking also shows that today’s rally is broad based, which usually is highly bullish for the stock market.

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Source: FidelitySignal.com

Real Estate Stocks Roll Over

One of the weakest sectors of the stock market is real estate, according to the ETFnext.com economic cycle indicator.

Not surprising that the Fidelity Real Estate Portfolio Fund (FRESX) shows a weakening chart pattern. FRESX has moved below its 100 day moving average, which is another bearish sign. While it is possible for real estate stocks to bounce back to the top of the trading range, we would look for growth somewhere else in the coming weeks.

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Best Fidelity Funds for 2014 – Part 2: A Bullish Case for Gold

The worst performing Fidelity mutual fund currently is the Fidelity Select Gold Fund (FSAGX) according to the fund ranking provided by FidelitySignal.com. Often, laggards become next year’s winners, and this is just one of the reasons for investors to pay attention to gold.

FSAGX is also forming a triple bottom chart pattern. If the support holds (see blue line on the chart), then it will be a very bullish chart formation for gold stocks. In addition, recent 13F filings indicate that hedge funds are buying gold bullion and gold mining stocks again.

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

Best Fidelity Funds for 2014 – Part 1: Bond Funds

Rising interest rates created a bear market for bonds resulting in most bond mutual funds loosing value in 2013. Unfortunately, there are just not many good choices for income investors.

One of the few exceptions is high-yield corporate bonds and one of the best mutual funds available to participate in this trend is the Fidelity Capital and Income Fund (FAGIX).

Despite the name, FAGIX is not a growth and income fund, but a high-yield bond fund, based on the Morningstar classification. The 4.32% yield and the 7.01% year-to-date return sets FAGIX apart of most bond funds. We would continue to stay bullish on FAGIX, as long as the trendline (see blue line on chart) and the 50-day moving average holds.

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