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

Money flow: Where is the bull market now?

While the stock market selling continues, the bull market in treasury bonds accelerates.

Fidelity Spartan Long-term Treasury Bond Index fund (FLBAX) closed up 2.67% up

The Fidelity Spartan Long-term Treasury Bond Index fund (FLBAX) closed up 2.67%

Best of 2011: Where is the bull market now?

The stock markets around the globe continue to be volatile after the S&P 500 index dropped more than 20% in August from the July peak. As we said in our earlier post, the stock market continues to be in a bearish downtrend. Today’s news about the weakness of the German economy and the disappointment about the impact of the meeting of the French and German leaders kept the market in negative territory.

A Wall Street adage says, “There is a bull market somewhere”. The smart money always seems to find its way away from declining assets into areas of growth. So where is the smart money now?

To answer the smart money question we ran the following screen: identify Fidelity mutual funds, which are uptrending (the net asset value is above the 100-day moving average) and continue to show positive results for the year. The results may surprise you.

Best investments of 2011

The best performing Fidelity mutual fund of 2011, as of August 16, using this criteria is by far the Fidelity Inflation-Protected Bond fund (FINPX), which is up 9.45% for the year:

Fidelity funds: best of 2011

The Fidelity Inflation-Protected Bond fund (FINPX) is up 9.45% year-to-date.

Another great performer is the Fidelity Spartan Long-Term Treasury Bond Index fund (FLBAX), which is up 6.57% year-to-date. The recent surge in the price of FLBAX shows the flight to quality, as investors rotated out of stocks in the recent market turmoil.

The Fidelity Spartan Long-Term Treasury Bond Index fund (FLBAX) is up 6.57% year-to-date.

The Fidelity Spartan Long-Term Treasury Bond Index fund (FLBAX) is up 6.57% year-to-date.


Market Trend is Still Bearish

We use the direction of the Fidelity Spartan 500 Index fund (FUSEX, up 2.18% in yesterday’s session) as the proxy for the overall market trend. In spite of the nice rally yesterday, we caution investors that FUSEX is still below it’s trendline, which forecasts the continuation of the bearish market trend until FUSEX is able to make a larger move on the upside.

Fidelity Spartan 500 Index fund (FUSEX) is well below the trendline (100-day moving average)

Fidelity Spartan 500 Index fund (FUSEX) is well below the trendline (100-day moving average)