Sector Rotation: Social Media ETF Outperforms Most Sector Investments

What are the best equity sectors to invest in, as the market reconfigures itself for the late December rally? We look for the answer using an unbiased ETF rotation screen (source: ETFnext.com):

ETFnext__Sector_Rotation

The screen shows that the Global X Social Media Index Fund (SOCL) ETF is newly rotated to the top 5 list, based on its increased price momentum. SOCL is an attractive investment, because it provides a diversified way to buy social media stocks. Top holdings include Facebook, Tencent, LinkedIn, SINA and Twitter (source: Morningstar).

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A closer look at the 1 year chart of SOCL shows that a strong uptrend started in July, but SOCL corrected in early November. The correction coincided with the highly publicized Twitter IPO on November 7. SOCL regained its positive trend in early December and now has one of the strongest price momentum compared to other sectors.

The chart also reveals the divergence between the volume and price trends, and that the recent advance is nearing an overhead resistance. Both the divergence and the proximity of the resistance level should caution investors about jumping in right now. On the other hand, a break out above the resistance on increased volume could make SOCL one of the most exciting investments of 2014.

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Content is King: Fidelity Select Multimedia Fund Closes at All-Time High

In a quiet market session today the Fidelity Select Multimedia Fund (FBMPX) stood out as one of the most exciting investments. FBMPX made a fresh high at the close and shows no signs of slowing down after a stellar 36.76% year-to-date return.

The top holdings for FBMPX include media and broadcasting companies, such as Disney. Time Warner, CBS, Comcast ad Viacom. While this year a lot of attention was focused on social media and green energy stocks, it turns out that smartly managed media companies providing content that consumers love have delivered better returns again.

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