Retailers continue to advance

The Fidelity Select Retailing (FSRPX) continued the recent series of gains. This sector has the best chance to become the market leader, if it can stay above its trendline in the coming sessions.

Fidelity Select Retailing (FSRPX, change: 1.76%)

Fidelity Select Retailing (FSRPX, change: 1.76%)

Mutual fund screens are provided by FidelitySignal.com

The broad-based stock market rally continues, retailers gain momentum

All Fidelity sector funds gained today, with the exception of the Fidelity Select Gold fund. The top gainer was the Fidelity Select Automotive (FSAVX, up +2.88% today) fund.

However, the sector fund with the most bullish momentum is the Fidelity Select Retailing (FSRPX, up 1.03% today) fund. FSRPX moved above its 100-day moving average today, although only with a narrow margin. We’ll be tracking this fund closely to see if retailers can provide leadership for the market.

Today’s losers were bond funds and gold. We’d like to see the current rally in stocks extend beyond the weekend before we can evaluate the potential of a change in the market trend.

A decisive move above its resistance level can turn the Fidelity Select Retailing (FSRPX, change: 1.03%) fund into a momentum leader.

A decisive move above its resistance level can turn the Fidelity Select Retailing (FSRPX, up 1.03%) fund into a momentum leader.

Mutual fund screens are provided by FidelitySignal.com

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

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)