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 Daniel Poppe

Market snapshot

•  Stocks: Last week, the major U.S. stock market indexes increased, led by the Russell 2000.

•  Bonds: The 10-year Treasury yield decreased last week.

•  Gold: Gold declined for the week but finished above $2,300 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.


The major U.S. stock market indexes were up last week. The Russell 2000 rose 1.71%, the NASDAQ Composite increased by 1.44%, the Dow Jones Industrial Average gained 1.14%, and the S&P 500 was up 0.56%. The 10-year Treasury bond yield fell following comments from Federal Reserve Chair Jerome Powell. Spot gold closed the week down 1.55%.

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.

Asset class performance

The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500, recently fell below its 50-day moving average but closed just above it on May 3. This weakness has been short term so far, as SPY is still well above its 200-day moving average.

The iShares 7-10 Year Treasury Bond ETF (IEF), which tracks intermediate-term Treasury bonds, finished last week below the 50-day moving average and above the 200-day moving average. The price of the ETF has seen a substantial year-to-date decline as rates have risen.

The SPDR Gold Shares ETF (GLD), which tracks the price of gold, has pulled back from its April high but remains above both the 50-day and 200-day moving averages. The rise this year is likely due to the heightened inflation that we’ve seen.

Flexible Plan Investments (FPI) 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 in a more tax-efficient manner than its ETF counterpart, GLD.

Market environment

Investors have been adjusting to recent economic data, including first-quarter GDP growth, monthly inflation data, Federal Reserve commentary, labor market data, and company earnings. In response, equity prices have generally trended downward over roughly the last month.

On April 25, the Bureau of Economic Analysis released first-quarter GDP growth data, which came in at an annualized growth rate of 1.6%. This rate is less than half of the 3.4% growth rate experienced in the fourth quarter of 2023 and below an estimated rate of 2.4%, says CNBC.

Slowing GDP growth is not a good sign for equity earnings, as the two are strongly related. Companies can find it difficult to grow earnings if GDP growth is low or even negative. Though it hasn’t dipped into negative territory yet, the trajectory of GDP growth from the third quarter of 2023 to the first quarter of 2024 is concerning and something to keep an eye on.

Inflation seemed to be coming under control in the fourth quarter of 2023, but it spiked again in the first quarter of 2024. Headline inflation came in at an annualized rate of 3.66% in January and 4.91% in February and March, far above the Fed’s target of 2%.

Treasury yields have increased substantially since the start of the year, likely due to the rise in inflation. Yields from the two-year Treasury to the 30-year Treasury have risen by more than 50 basis points year to date through May 3. This significant jump suggests that market participants have grown concerned about the Federal Reserve’s ability to bring inflation down.

Fed Chair Jerome Powell eased concerns somewhat last week when he indicated that the Federal Reserve’s next move is unlikely to be a rate hike. He said that he still feels the current fed funds rate is restrictive. The 10-year Treasury rate fell from 4.69% on Tuesday (April 30) to 4.5% on Friday (May 3), following Powell’s comments.

Market participants seem to agree that the next move is unlikely to be a hike. CME Group’s Fed Watch tool currently indicates that market participants are pricing in a decrease during the Federal Open Market Committee’s September meeting.

Nonfarm payroll gains for April came in at 175,000, which is below the average monthly gain of 242,000 over the past year. The unemployment rate came in at 3.9%, still around historical lows.

According to FactSet’s Earnings Insight report from May 3, first-quarter earnings growth was the strongest since the second quarter of 2022, with most companies surprising to the upside. However, valuations are above their historical averages. Despite a slowdown in the overall economy in the first quarter, companies in the S&P 500 delivered strong earnings growth.

FPI indicators

The Quantified Pattern Recognition Fund (QSPMX) started last week with a 110% long exposure. Exposure changed to 100% long at Monday’s close, 50% long at Wednesday’s close, 60% long at Thursday’s close, and 50% long at Friday’s close.

Our QFC Political Seasonality Index strategy was defensive going into Monday, entered equities at Monday’s close, and went defensive again at Thursday’s close. (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.)

The Volatility Adjusted NASDAQ strategy started last week with an exposure of 120% to the NASDAQ. It decreased exposure to 100% on Wednesday.

The Systematic Advantage strategy was 120% exposed to the S&P 500 throughout the week.

Our Quantified STF Fund (QSTFX) was 100% long throughout last week.

Volatility Adjusted NASDAQ, Systematic Advantage, the Quantified STF Fund, and the Quantified Pattern Recognition Fund can all employ leverage—hence the investment positions may at times be more than 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 equities 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 both high returns and high risk for equities.

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