You can try using a ViewStack and a Timer to iterate through its children. Just add a fade in/fade out effect on them and you'll get what you're looking for.
Something like that :
<?xml version="1.0" encoding="utf-8"?>
<mx:Application xmlns:mx="http://www.adobe.com/2006/mxml" layout="absolute" backgroundColor="black" creationComplete="creationCompleteHandler">
    <mx:Script>
        <![CDATA[
            private var timer:Timer;
            private function creationCompleteHandler():void
            {
                timer = new Timer( 2000 );
                timer.addEventListener( TimerEvent.TIMER, timerHandler );
                timer.start();
            }
            private function timerHandler( e:TimerEvent ):void
            {
                if( vs.selectedIndex == vs.getChildren().length - 1 )
                    vs.selectedIndex = 0;
                else
                    vs.selectedIndex++;
            }
        ]]>
    </mx:Script>
    <mx:Fade id="fadeIn"  alphaFrom="0" alphaTo="1" duration="500" effectEnd="timer.start();"/>
    <mx:Fade id="fadeOut" alphaFrom="1" alphaTo="0" duration="500" effectEnd="timer.stop();"/>
    <mx:ViewStack id="vs">
        <mx:Canvas showEffect="fadeIn" hideEffect="fadeOut">
            <mx:Image source="picture1.jpg"/>
        </mx:Canvas>
        <mx:Canvas showEffect="fadeIn" hideEffect="fadeOut">
            <mx:Image source="picture2.jpg"/>
        </mx:Canvas>
        <mx:Canvas showEffect="fadeIn" hideEffect="fadeOut">
            <mx:Image source="picture3.jpg"/>
        </mx:Canvas>
    </mx:ViewStack>
</mx:Application>
Note that this code isn't the most optimized one. The best would be to create a custom component with a black background and 2 
Image components.
- Set the 
alpha property of both of
them to 0 
- Load a picture in the first one, then
play your fade in effect
 
- Begin to load the following picture
in the second 
Image component 
- Fade out the first one, fade in the
second, and load the following
picture in the first Image, etc.
 
This way you only got one Container (instead of one per picture plus the ViewStack) and 2 Images.
It will also be easier to clean them from memory if you need to.