Regarding Energy Services, we need to keep in mind that for whatever reasons (selling by Fidelity, external oil related events & OPEC, basic inability of the market to concentrate on fundamentals and invest solely based on emotions) this fund has been hemorraging very badly over the past three weeks or so. While the past few days may turn out to be a bottom, the primary mission at this time, as with any patient in a similar state, is to first stop the bleeding. Only when that occurs can its condition and prognosis be properly analyzed, and the speed of its recovery estimated.
Many investors, having profited greatly from this sector over the past few years, are now holding on and sitting on losses, despite technical indicators that ordinarily would have gotten them out long before now. The reason, perhaps, is widespread disbelief that such a sterling sector could be enduring such a decline. It's okay if gold plunges like this, or even one of the techs, but the beloved Energy Services fund ... never !!!
If the current bottom holds (which may be the equivalent of conclusively proving that there is a God in heaven) it will be nice to see small, yet steady gains in the days ahead. My best guess is that if this happens, investors who have been waiting for this turnaround will enthusiastically rush back into this fund, which should continually increase its upward momentum. Since there are, at this time, no techncial indicators that are giving us evidence that such a move is imminent, we just need to be very patient and hope for a slow improvement that evolves into a very nice upward move.
Where retailers are concerned, yesterday's widespread downgrading of this sector does not help things, and the charts of this fund were already showing signs of slowing momentum and a bit of toppiness. Assuming that some retailers will do exceptionally well this Holiday season, and that others will not, investors in this fund have to place their trust in Fidelity's crack analysts to pick and choose the correct ones. Of course, these are the same fellows who may, or may not have been unloading tech and energy stocks these past weeks, locking in profits for their diversified fund managers while leaving the Select Fund managers, and their investors, hanging out to dry.
In any event, never a dull moment. Have a great Thanksgiving Day everybody.
Bernie |
