Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

1st Quarter | 2024

Quarterly recap



Current market environment performance of dynamic, risk-managed investment solutions.

By Will Hubbard

Market snapshot

•  Stocks: Stocks snapped a three-week losing streak last week. The S&P 500 gained nearly 3%. 

•  Bonds: Fixed-income prices remain under pressure, with the 10-year Treasury yield reaching new highs for the year.

•  Gold: Gold lost 2.26% to close at $2,337.96 per ounce, bringing its year-to-date return to 13.33%. Gold has recently shown a tendency to trade independently of the U.S. dollar, which was flat last week. Amid ongoing global tensions, commodities could become more attractive as investments and hedges against supply and demand disruptions.

•  Market indicators and outlook: Market regime indicators show we are 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.


The major U.S. stock indexes were up last week. The NASDAQ gained 4.23%, the Russell 2000 small-cap index climbed 2.72%, the S&P 500 increased by 2.68%, and the Dow Jones Industrial Average inched up 0.67%. The 10-year Treasury yield increased by 0.05% to 4.67%. Gold cooled off, losing 2.26%.

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


Last week, equity markets posted their best week of the year. Despite the bounce, the major indexes are still down for April.

On the economic front, the manufacturing services purchasing managers’ index (PMI) dropped to 49.9 last month, falling into contraction territory again after a brief improvement to 51.9 the previous month. This part of the market has been contracting for almost a year and a half.

Thursday’s advance gross domestic product (GDP) figure came in much lower than expected at 1.6%. Economists expected 2.5% after the previous quarter’s growth of 3.4%. This slowdown was primarily due to declines in foreign trade and inventories, although strong consumer spending provided some support.

On Friday, the University of Michigan’s Consumer Sentiment Index decreased to 77.2 from a previous and expected 77.9. The more significant announcement was the personal consumption expenditures (PCE) number. The core PCE, one of the Federal Reserve’s key inflation measures since it targets goods and services consumed by individuals, was in line with expectations at 0.3%.

In recent Market Updates, we noted that all sectors of the S&P 500 have helped keep the market above its 50-day moving average, reaching near-historical highs. However, in early April, the S&P 500, Dow Jones Industrial Average, and NASDAQ fell below their moving averages, ending the 10th-longest uptrend since the 1950s.

Meanwhile, European equities, as represented by the Europe 50 Index, have held the line, bouncing off their averages a few times. This suggests that the weakness observed in the U.S. is not being felt globally. The following chart compares the S&P 500’s 50-day moving average (magenta line) to that of the Europe 50 (blue line).

Bespoke Investment Group notes that investors are anticipating the Federal Reserve’s upcoming announcement on interest rates. Expectations have shifted significantly, from nearly six cuts this year to potentially just one by the December meeting. According to the CME FedWatch tool, there’s an 80% likelihood that rates will be cut from the current range of 525–550 basis points, though the extent of the cut remains uncertain.

Since the beginning of 2022, the rising interest-rate environment has been hard on small-cap stocks, largely because these companies typically incur higher interest costs compared to large-cap companies. As a result, since January 2022, small caps have declined 7%, while the S&P 500 has gained 7%.

In summary, the discussion surrounding interest rates and inflation is influencing not only the fixed-income market but also shaping expectations for domestic equities, leading to valuation gaps between the few largest companies and the many small ones.


Last week, the 10-year Treasury yield rose by 5 basis points to 4.67%. The drop in prices and increase in yields was driven by higher-than-expected inflation figures and ongoing concerns about interest rates. The Federal Reserve has consistently delayed its expectations for rate cuts, prompting investors to sell longer-dated bonds and demand higher interest on new issues to offset the inflation risk.

It was a quiet week for central banks. Bespoke Investment Group reported that some rate decisions were made by central banks in emerging markets, Indonesia, Turkey, and Russia. The central banks in those three countries decided to maintain their policy positions. As we head into this week, the focus is on the Federal Reserve, which is scheduled to announce its decision about interest rates on Wednesday.

A global GDP-weighted index of policy rates indicates that while global rates appear to have peaked, they have not yet started to decline.

The bottom line is that the market seems poised for rate cuts, but without supporting economic data like rapidly increasing unemployment or clear signs of continued disinflation, it’s hard to justify any rate cuts. Without such justification, the Federal Reserve is likely to punt its decision on rate cuts to the next meeting.


Last week, gold lost 2.26% to close at $2,337.96 per ounce, bringing its year-to-date return to 13.33%. At one point during the week, gold surged above $2,400 per ounce due to bullish trends and strong year-to-date momentum before settling back down. Recently, gold has decoupled somewhat from the U.S. dollar, which remained flat last week.

Commodities had mixed performance last week. Oil rose nearly 2%, and commodities overall increased 0.99%, according to the Invesco Yield Diversified Commodity Strategy. Geopolitical uncertainty continues to make commodities volatile but also seems to be adding value to gold.

As global tensions persist, particularly with the ongoing war in Ukraine and escalating conflicts in the Middle East, commodities could become a more attractive investment and hedge against potential supply and demand shocks.

Flexible Plan Investments is the subadviser to the only U.S. gold mutual fund, The Gold Bullion Strategy Fund (QGLDX), designed at its introduction 10 years ago to track the daily price changes in the precious metal.

The indicators

The very short-term-oriented QFC S&P Pattern Recognition strategy started last week 60% long, increased exposure to 120% long on Monday, pulled back to 100% long on Tuesday’s close, and increased exposure to 110% on Friday. Our QFC Political Seasonality Index spent the week in its risk-off posture. (Our QFC Political Seasonality Index is available—with all of the daily signals—post-login in our Weekly Performance Report section under the Domestic Tactical Equity category.)

Our intermediate-term tactical strategies have been varied in their degree of defensive positioning. The key advantages these strategies offer to investors are their ability to adapt to changing market environments, participate during uptrends, and adjust exposure to more defensive posturing during downtrends.

The Volatility Adjusted NASDAQ (VAN) strategy started the week 120% long, decreased exposure to 100% long on Wednesday’s close, and increased exposure back to 120% long on Friday. Our Systematic Advantage (SA) strategy was active last week. It started the week 120% long, moved to 60% long on Monday’s close, scaled back to 120% on Tuesday’s close, and increased exposure back to 120% long on Friday. Our QFC Self-adjusting Trend Following (QSTF) strategy was 100% long all week. VAN, SA, and QSTF can all employ leverage—hence the investment positions may at times be more than 100%.

Our Classic model was long risk-on positioning all 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 more restrictive platforms and can take up to one month to generate a new signal.

Flexible Plan’s Growth and Inflation measure, one of our Market Regime Indicators, shows markets are in a Normal economic environment stage (meaning inflation is falling and GDP is growing). 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. From a risk-adjusted perspective, Normal is one of the best stages for stocks, with limited downside.

Our S&P volatility regime is registering a High and Rising reading. This environment favors equity 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 lower returns and high volatility for the major asset classes.

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