The domestic and global economies are improving on a fundamental and technical basis, but the nascent recovery is still fragile, these brokerage experts say.

Who's Talking: Fidelity's Market Analysis, Research and Education Group

The Gist: Keeping an eye on leading economic indicators -- those that identify emerging trends -- is one of the most useful ways for investors to gauge the direction of the U.S. economy, the folks at Fidelity write, so it's good news that more leading indicators are pointing towards improvement.

For example, five of the 10 components of the Conference Board's Leading Economic Index were moving in a more positive direction on a trailing six-month basis at the end of June, up from three in April, and just two in March, the team at Fidelity says.

"Taken together, the steady improvement in recent months in many leading U.S. economic indicators has continued to support the notion that the economy is firmly in a stabilizing trend and that the worst of the economic recession is in the past," Fidelity says.

However, that hardly means the recovery is a foregone conclusion, the research team says. "Although the economy may have rebounded from its worst level, there is much uncertainty about the timing, sustainability, and magnitude of any potential recovery," Fidelity says. "Some leading indicators have shown only modest improvement after falling to dramatically low levels, while others have yet to demonstrate any sustained progress."

It's also troubling that leading indicators for critical, tangible economic activity such as employment and manufacturing have yet to turn definitively upward, Fidelity says. "Given the level of trauma in the labor markets, employment indicators are likely to provide important clues about the timing and strength of an economic recovery," the group says.

Who's Talking: Mary Ann Bartels, technical research analyst, Bank of America-Merrill Lynch (BAC)

The Gist: On a technical basis, the market confirmed its breakout from the downtrend line in place since May 2008, thanks to volume and breadth (which measures advancing issues vs. declining ones).

The good news is that Bartels's year-end target for the S&P 500 remains intact at 1055 to 1065, implying an upside of 9% to 10% from current levels -- and a full 60% from the early March low.

In other positive signs, cash on the sidelines remains elevated and provides a potential source of demand for stocks; flows into domestic mutual funds remains light; and individual investor sentiment still has a bearish bias. "This all sums up to be a good contrarian bullish signal for the market," Bartels says.

There are some good technicals on the global stage as well, most notably increasing demand for copper. "Considered by many market participants to be an indicator of global economic growth, copper continues to rally," Bartels says. "The Baltic Dry Index has also rallied, pointing to global growth, especially from China and other Asian economies."

Perhaps most importantly for equity investors making allocation decisions, the technicals indicate that mega-cap multinationals are emerging into a leadership position vs. the broader S&P 500. Names such as 3M (MMM), Altria (MO), Boeing (BA), Honeywell (HON) and Wal-Mart (WMT), among others, appear poised for relative outperformance as a group, the analyst says.