Current market environment performance of dynamic, risk-managed investment solutions.
By Daniel Poppe
Market snapshot
• Stocks: Stocks were higher last week. The Dow Jones Industrial Average gained 3.20%, the S&P 500 rose 3.74%, the NASDAQ Composite advanced 4.91%, and the Russell 2000 added 5.54%.
• Bonds: The 10-year Treasury bond yield fell from 4.06% to 4.02%.
• Gold: Spot gold rose to 4.29%, closing above $4,200 an ounce.
• Market indicators and outlook: Market regime indicators show the market is in a Normal economic environment stage, which is historically positive for stocks, bonds, and gold but with a substantial risk of a downturn for gold. Normal is one of the best stages for stocks, with limited downside. Volatility is High and Rising, which favors stocks over gold and then bonds.
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Stocks
The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500, finished the week above both its 50-day and 200-day moving averages.
Stocks rebounded last week, though not enough to reach new all-time highs. Volatility has picked up in recent weeks, potentially driven in part by tax-loss harvesting, which often occurs in the final quarter of the year. Some of the choppiness may also reflect a market wrestling with competing narratives: the bullish case for AI-led productivity gains versus concerns about elevated valuations, prompting some profit taking after the sharp rebound from the April lows.
With the third-quarter earnings season now behind us, it will be several weeks before companies begin reporting their next quarterly results. In the meantime, investors will continue to monitor Federal Reserve rate policy and incoming economic data—which can resume now that the government shutdown has ended.
Bonds
The iShares 7-10 Year Treasury Bond ETF (IEF), which tracks intermediate-term Treasury bonds, finished last week above both its 50-day and 200-day moving averages.
Bonds are near their highs for the year. Inflation has remained low after retreating from the peaks of 2022, and signs of softening in the labor market prompted the Fed to resume the rate-cutting cycle it had paused at the start of the year. These dynamics have made the bond market more appealing, with prices rising steadily throughout the year.
The next Fed meeting is on December 10. According to CME Group’s FedWatch tool, investors currently see a high likelihood of a 25-basis-point rate cut at that meeting. When the decision comes out, investors will also be looking for clues about the potential for additional cuts in 2026.
Gold
The SPDR Gold Shares ETF (GLD), which tracks the price of gold, finished the week above both its 50-day and 200-day moving averages.
Flexible Plan Investments (FPI) is the subadviser to the only U.S. gold mutual fund, The Gold Bullion Strategy Fund (QGLDX). 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 with a 130% net long exposure to the S&P 500. It shifted to 50% net long on Wednesday and increased to 60% net long on Friday.
Our QFC Political Seasonality Index strategy was aggressive throughout the week. (Our QFC Political Seasonality Index—with all of the daily signals—is available post-login in our Weekly Performance Report section under the Domestic Tactical Equity category.)
The Volatility Adjusted NASDAQ strategy started the week with a 120% net long exposure to the NASDAQ 100. Exposure changed to 100% net long on Tuesday.
The Systematic Advantage strategy started the week with a 60% net long exposure to the S&P 500. Exposure changed to 90% net long on Monday.
Our QFC Self-adjusting Trend Following Strategy’s primary signal was 0% exposed to the NASDAQ 100 at the start of the week. Exposure changed to 200% net long on Monday.
Volatility Adjusted NASDAQ, Systematic Advantage, QFC Self-adjusting Trend Following, and the QFC S&P Pattern Recognition strategies can all employ leverage, so their investment positions may exceed 100%.
Our Classic model remained in stocks 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 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 carries a substantial risk of a downturn in this stage.
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 23% of the time since 2003. It is a stage of high risk for stocks and gold.