Market Update 11/9/26

By Daniel Poppe

Market snapshot

•  Stocks: The major U.S. stock market indexes finished lower last week. The NASDAQ Composite fell 3.37%, the S&P 500 declined 2.67%, the Russell 2000 lost 2.04%, and the Dow Jones Industrial Average decreased by 0.94%.

•  Bonds: The 10-year Treasury bond yield fell from 4.94% to 4.86% last week.

•  Gold: Spot gold rose 5.06%.

•  Market indicators and outlook: The economic environment is classified as Normal, favoring stocks and gold for returns. Volatility is High and Rising, which favors stocks over gold and then bonds.

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For the latest information on our Quantified Funds, check out our weekly fund updates. You can also see the funds’ daily holdings here.

Stocks

The SPDR S&P 500 ETF (SPY) closed Friday at 735.29, below its 50-day moving average (765.68) but above its 200-day moving average (730.38). The longer-term uptrend remains intact, although the short-term picture has weakened.

A single day of AI-hardware selling set the tone. CNBC reported that every S&P 500 sector closed lower on Thursday, Nov. 5, led by names tied to the AI buildout. Micron and AMD each fell about 17%, Marvell dropped more than 16%, and Nvidia lost more than 9%, on fears that Democratic midterm wins would slow data center construction.

CNBC also reported that voters rejected data centers in 40 of 41 local ballot measures. OnePoint BFG’s Peter Boockvar said construction and infrastructure spending changes could drive stock prices from here. Lower AI infrastructure spending could limit profits of AI hardware firms, putting pressure on those names.

The damage was concentrated in large-cap growth rather than spread across the market. The NASDAQ 100 fell 4.91% on the week, more than twice the Russell 2000’s decline. Beneath the surface, the market was split. Five of the 11 sectors finished the week higher, and Consumer Discretionary led with a 2.68% gain.

Bonds

The iShares 7-10 Year Treasury Bond ETF (IEF) closed Friday at 91.86, above its 50-day moving average (90.73) but below its 200-day moving average (93.76). The iShares 20+ Year Treasury Bond ETF (TLT) showed the same pattern, closing at 81.92, above its 50-day average (80.38) but below its 200-day average (84.47). Both ETFs remain in longer-term downtrends despite their recent gains.

Bonds gained last week as Treasury yields on the long end of the curve fell following the midterm elections. CNBC reported that the election results could lead to lower spending from a divided government. It also pointed to a sharp drop in crude oil prices as concerns eased about an escalation in the Iran war.

Treasurys gained again on Thursday as investors fled technology stocks, according to CNBC. Friday gave back part of the week’s gains after a much stronger-than-expected October jobs report, CNBC reported. CME FedWatch put the odds of a quarter-point hike in December above 77%, up from over 66% a day earlier.

Gold

Gold’s rally last week came within a longer-term downtrend. The SPDR Gold Shares ETF (GLD) closed Friday at 372.52, below both its 50-day moving average (384.96) and its 200-day moving average (411.24).

The midterm elections were the swing factor for the metal last week. Kitco reported that gold slipped below $3,900 on Tuesday on strong U.S. economic data, then rallied above $4,000 after Democrats won both chambers of Congress. Treasury yields and the U.S. dollar fell sharply on expectations of gridlock and less government borrowing. Gold reached a weekly high of $4,147.02 on Thursday. The metal’s weekly gain came despite a 0.41% increase in the U.S. Dollar Index.

Crude oil, meanwhile, posted its steepest weekly drop in months as hopes for U.S.-Iran diplomacy drained the war premium, CNBC reported. Brent fell more than 16% to $98.32 per barrel, while WTI declined nearly 13% to $90.83.

The Quantified Gold Futures Tracking Fund (QGLDX) gained 4.70% last week, compared with a 4.51% return for COMEX gold futures. Launched in 2013, the fund is designed to track the daily price changes in the precious metal in a more tax-efficient manner than its ETF counterpart, GLD.

FPI’s indicators

The QFC S&P Pattern Recognition strategy’s primary signal started the week at 40% net long exposure to the S&P 500. Exposure jumped to 140% net long on Monday and 160% net long on Tuesday before falling to 100% net long on Wednesday and 0% net long on Thursday. The strategy ended the week at 30% net long.

Our QFC Political Seasonality Index strategy was aggressive throughout the week. (Our QFC Political Seasonality Index—with all of the daily signals—is available after login in our Weekly Performance Report section under the Domestic Tactical Equity category.)

The Volatility Adjusted NASDAQ strategy started the week with a 20% net long exposure to the NASDAQ 100. Exposure fell to 0% net long on Wednesday before shifting to 20% net short on Friday.

The Systematic Advantage strategy started the week at 60% net long exposure to the S&P 500. Exposure jumped to 120% net long on Monday, held there through Thursday, and returned to 60% net long on Friday.

Our QFC Self-adjusting Trend Following strategy’s primary signal held a 0% net long exposure to the NASDAQ 100 throughout the week.

The Volatility Adjusted NASDAQ, Systematic Advantage, QFC Self-adjusting Trend Following, and QFC S&P Pattern Recognition strategies can all employ leverage, so the investment positions may at times exceed 100%.

Our Classic model was aggressive throughout last week. Most of our Classic accounts follow a signal that will allow the strategy to change exposure in as little as a week. A few accounts are on platforms that are more restrictive and can take up to one month to generate a new signal.

FPI’s Growth and Inflation measure is one of our Market Regime Indicators. It shows that we are in a Normal economic environment stage (meaning a positive monthly change in prices and a positive monthly change in GDP). Historically, a Normal environment has occurred 75% of the time since 2003 and has been a positive regime state for stocks, bonds, and gold. Stocks have the highest rate of return in Normal periods. Gold has the second-highest return but has also experienced high drawdown in these environments.

Our S&P volatility regime is registering a High and Rising reading, which favors stocks over gold and then bonds from an annualized return standpoint. The combination has occurred 28% of the time since 2003.