SO jQuery Fiddle

Test Fiddle mainly for SO Questions jQuery 1.4.3, UI 1.8.5

by Nick Craver

HTML

<link rel="stylesheet" href="http://ajax.googleapis.com/ajax/libs/jqueryui/1.8.5/themes/ui-lightness/jquery-ui.css">
<ul id="items">
    <li>Item 1</li>
    <li>Item 2</li>
    <li>Item 3</li>
    <li>Item 4</li>
</ul>

CSS

li { 
    width: 80px; 
    height: 80px; 
    background: #444; 
    color: white; 
    font-size: 20px; 
    padding: 10px; 
    float: left; 
    margin: 5px;
}

JavaScript

$("#items li").slice(2).hide();
var index = false;
setInterval(function() {
    $("#items li").eq(index).fadeOut(function() {
       $("#items li").eq(2).insertAfter(this).fadeIn();
       $(this).appendTo("#items");
       index = !index;
    });  
}, 3000);