By Tim Hanna As pointed out in last week’s Market Update , Thanksgiving week is normally very bullish for the markets. The shortened holiday week followed history in a big way. Each index was up over 2%, and for the first time, the Dow Jones Industrial Average crossed above 30,000! The NASDAQ Composite was up 2.96%, the S&P 500 gained 2.27%, the Dow Jones Industrial Average was up 2.21%, and the Russell 2000 small-capitalization index increased by 3.92%. The 10-year Treasury bond yield rose 1 basis point to 0.84%, as Treasury bonds fell slightly for the week. Last week, spot gold closed at $1,787.79, down 4.45%. Stocks Stocks cheered last week’s positive COVID-19 vaccine updates as well as increased hopes of reopening. Another major contributor to the move upward was the news that President-elect Biden nominated former Federal Reserve Chair Janet Yellen as Treasury Secretary. Markets seemed to respond positively to the diminishing political uncertainty, specifically the beginning of transition measures by the General Services Administration (GSA). Unemployment claims rose to 778,000 (forecast 732,000), their highest level in five weeks. The University of Michigan’s gauge of November consumer sentiment was revised lower to 76.9, its lowest level since August. The Conference Board’s Consumer Confidence fell to 96.1, more than the expected reading of 97.7. Benjamin Graham, regarded by many to be the father of value investing, used the investment approach to build tremendous wealth during his career. For some time now, investors have struggled with their allocation to Value, especially since Growth has been such a clear outperformer in various environments over the years. The following chart illustrates the typical investor experience in the two styles over the last year. Growth (blue line) over Value (orange line) has been the trade. However, has Growth gone too far? Is it Value’s time to shine? No one knows for certain, but the following chart shows that Value more than doubled the return of Growth over the past month. Coverage of “Growth versus Value” in the industry has also increased, possibly due to the outperformance we’ve seen in Value over the recent weeks. Bonds Treasury yields increased last week, finishing the week up 1 basis point (ending at 0.84%) on the 10-year Treasury. On the municipal bond front, T. Rowe Price traders noted , “The broad municipal bond market posted slightly positive returns through most of the week and outperformed Treasuries. With high-grade tax-exempt yields little changed, strong demand for lower-rated bonds led to a further tightening of credit spreads—the extra yield offered over Treasuries, and an inverse measure of the sector’s relative appeal.” Investment-grade corporate-bond spreads tightened, possibly due to positive political and COVID-19 vaccine headlines. Prior to Thanksgiving Day, above-average trading volumes and low levels of new issuance added technical strength. Gold Last week, spot gold closed at $1,787.79, down 4.45%. Other safe-haven assets did poorly last week, primarily due to investors’ “risk-on” behavior. Gold just couldn’t catch a break, falling every day during the shortened Thanksgiving week. The following chart highlights the daily drops in gold and shows the relationship last week between gold (blue) and the U.S. dollar (orange). Of significance is the breakdown of gold’s previous support line, shown in the following chart (red horizontal line). From a technician’s perspective, the prior support line will be watched as an intermediate-term resistance level going forward. The indicators Our Political Seasonality Index was long to start last week, exiting at the close on Friday, November 27. (Our Political Seasonality Index is available post-login in our Weekly Performance Report section under the Domestic Tactical Equity category.) The very short-term-oriented QFC S&P Pattern Recognition strategy’s equity exposure had a long bias, starting last week at 80% long, reducing to 74% long at Tuesday’s close. Our intermediate-term tactical strategies are uniformly positive, although to various degrees. The Volatility Adjusted NASDAQ (VAN) strategy had a 120% exposure to the NASDAQ on Monday and increased exposure throughout the week, ending the week 200% exposed to the long side. The Systematic Advantage (SA) strategy is 131% exposed to the S&P 500, our Classic strategy is in a fully invested position, and our QFC Self-adjusting Trend Following (QSTF) strategy was 200% exposed all of last week. VAN, SA, and QSTF can all employ leverage—hence the investment positions may at times be more than 100%. Flexible Plan’s Growth and Inflation measure, one of our Market Regime Indicators , shows that we remain in a Normal economic environment stage (meaning a positive monthly change in the inflation rate and positive monthly GDP reading). Historically, a Normal environment has occurred 60% of the time since 2003 and has been a positive regime state for stocks, bonds, and gold. Gold tends to outpace both stocks and bonds on an annualized return basis in a Normal environment but also carries a substantial risk of a downturn in this stage. From a risk-adjusted perspective, Normal is one of the best stages for stocks, with limited downside. Our Volatility composite (gold, bond, and stock market) is registering a High and Rising reading, which favors stocks over gold and then bonds from an annualized return standpoint. The combination has occurred 23% of the time since 2003. It is a stage of medium returns for all asset classes but with substantial volatility for all but bonds.