Financial services stocks are the top gainers today

The stock market rally continued after two days of gains. The Fidelity Select Financial Services fund (FIDSX, change: 4.02%) gained the most today. This sector has been one of the weakest so far this year. For the negative trend to reverse, we’d like to see FIDSX to move above both the red trendline and its 100 day moving average (gray line on the chart).

The Fidelity Select Financial Services fund (FIDSX, change: 4.02%) gained the most today.

Mutual fund screens are provided by FidelitySignal.com 

  

Stocks close higher following an impressive late afternoon surge of buying

The Fidelity Spartan 500 Index fund (FUSEX) closed up 2.28%. The Automotive sector was the top performer today. In spite of the impressive gain, we warn investors that the U.S. stock market is still in a downtrend.

The top gainer of the day was the Fidelity Select Automotive fund (FSAVX, change: 5.23%), but the trend is still down.

Mutual fund 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%)

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U.S. stocks pull back to the support level

The S&P 500 index fund is approaching the support level, which must hold for the market to stay in the trading range.

Fidelity Spartan 500 Index fund (FUSEX, change: -2.50%)

Mutual fund screens are provided by FidelitySignal.com

 

U.S. stocks stay in trading range after a three day rally

The market gains were impressive in the last three days of trading, as hopes for the resolution of the Greek credit crisis lifted markets around the world. However, we must continue to caution stock market investors. The S&P 500 index has not yet broken out of its trading range and continues to be in a bearish downtrend. A pull back towards the support level is possible at this point and would raise additional concerns about losses.

Fidelity Spartan 500 Index (FUSEX, change: 1.06%)

Mutual fund screens are provided by FidelitySignal.com

 

Beaten down sectors are taking a stand today

A remarkable thing happened today. All, I repeat all, of the dozens of Fidelity’s U.S. sector funds closed higher. The winner of the day was the Fidelity Select Banking fund (FSRBX), which represents one of the most beaten down investment sectors. FSRBX gained an incredible +4.46% today.

The rally came in response to positive news about a new opportunity to fix the European debt crisis. From the standpoint of U.S. mutual fund investors the best case scenario is that the market sectors can define a support level at this price point, which will hopefully hold as the historically dangerous fall season approaches.

Fidelity Select Banking fund (FSRBX, change: 4.46%)

However, we continue to caution investors from jumping in with risky bets until the financial markets settle down and enter into a nice and easy uptrend.

Mutual fund screens are provided by FidelitySignal.com

Panic selling continues

The stock market has dropped in panic selling in the last two days and is approaching the support level (see FUSEX chart below). Our best hope is that short sellers will cover their positions ahead of the weekend, which will lead the market higher while reinforcing the support level.

Fidelity Spartan 500 Index fund (FUSEX, change: -3.18%)

The selling of equities today was ferocious, reminiscent of the worst days of 2008.  Energy services stocks got hit especially hard (see FSESX below). This was part of the global sell-off of commodity-related investments (see FFGCX below).

Fidelity Select Energy Services fund (FSESX, change: -6.92%)

Fidelity Global Commodity Stock fund (FFGCX, change: -6.46%)

Mutual fund screens are provided by FidelitySignal.com

The market is at the cross-roads

The U.S. stock market indeces bounced back from their support level in the last few trading sessions, however the momentum is not very strong and the volume is light. The overall trend continues to be bearish until FUSEX moves above the trendline.

The Fidelity Spartan 500 Index fund (FUSEX).

As gold moving higher again reversing its recent pullback, gold stocks moved up to their resistance level. A breakout on high volume from this level would be considered very bullish.

The Fidelity Select Gold fund (FSAGX) has approached the top of its trading range.

The panic of 2011

In our blog post three days ago we said that we wouldn’t be surprised to see the selling continued. On Thursday and Friday the stock market sold off on higher than average volume. Unfortunately, the stock market is increasingly in a panic mode with brokers reporting a spike in trading volume, as individual investors sell their stocks.

The good news is that the Fidelity Spartan 500 Index fund (FUSEX) is near its support level. If the support holds, the market can bounce back from here next week. If the support doesn’t hold, renewed selling can ensue and the panic can accelerate.

The Fidelity Spartan 500 Index fund (FUSEX) is near the support level.