Sector Rotation: Three Fidelity Technology Funds are Moving to the Top

The question about the tapering of the Fed’s QE3 program dominated the markets today. The S&P 500 index managed a modest gain of 0.63% and closed at 1786.54.

As the broad U.S. equity averages continue to stay in bullish territory, one of the most important changes in market dynamics is the re-emergence of technology, as one of the market leading sectors. Fidelity has several tech funds that can help investors to take advantage of this new trend. Here we highlight three of them:

The Fidelity Select Electronics Fund (FSELX) was the best-performing Fidelity mutual fund today (source: www.fidelitysignal.com/market_indicators). FSELX top holdings include large cap technology companies, such as Intel, Broadcom, Qualcomm and Micron. FSELX reached a new 52-week high today and we would not be surprised to see it become one of the top funds in the next market cycle.

fselx

The other two tech funds we’d like to highlight are the Fidelity Select Software and Computer Fund (FSCSX) and the Fidelity Select IT Services Portfolio Fund (FBSOX). Both funds continue to show an almost uninterrupted bullish trend since the April market correction.

fscsx

fbsox

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

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August brings remarkably low volatility to the U.S. stock market

The widely followed VIX (Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options) is making lower lows and lower highs. While the Fidelity Spartan 500 Index Fund (FUSEX), our benchmark investment that mirrors the performance of the S&P 500 index, is making higher highs and higher lows.

The current low volatility of the U.S. stock market is in stark contrast to the extreme swings of last August, following the aftermath of the downgrade of the U.S. debt. Also gone is the volatility that followed the standoff with Iran and the Euro debt crisis just in recent months.

As the market is advancing in a seemingly orderly way, we continue to be cautiously optimistic. Our biggest worry is the seasonal weakness that can develop in the fall months of September and October. As shown on the chart below, FUSEX is approaching its overhead resistance. Breaking this level in the days and weeks ahead will be critical for the market to reassert the bullish momentum.

FUSEX

The Fidelity Spartan 500 Index Fund (FUSEX, last change: -0.10%) is making higher lows and higher highs, but a breakout above the resistance level will be needed to reassert the bullish uptrend.

Technical analysis screens are provided by FidelitySignal.com    

Panic selling of 2011 continues: U.S. stocks break down

We have warned about the risk of U.S. stocks moving lower in the fall season following the panic selling in early August. Unfortunately, our benchmark S&P 500 index fund moved below its support level today, breaking its support level.

Fidelity Spartan 500 Index fund (FUSEX, change: -2.86%)

Fidelity Spartan 500 Index fund (FUSEX, change: -2.86%)

http://fidelitysignal.com/aug_2011