Current market environment performance of dynamic, risk-managed investment solutions.
By Daniel Poppe
Market snapshot
• Stocks: Stocks were higher last week.
• Bonds: The 10-year Treasury yield fell last week.
• Gold: Spot gold fell last week, closing above $3,200 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 Low and Falling, which favors stocks over gold and then bonds.
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Index summary
The major U.S. stock market indexes were up last week. The Russell 2000 returned 3.01%, the S&P 500 returned 3.45%, the Dow Jones Industrial Average returned 3.83%, and the NASDAQ Composite returned 4.25%. The 10-year Treasury bond yield fell from 4.38% to 4.29%. Spot gold closed the week down 2.79%.
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.
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 hit all-time highs as investors looked past tariff concerns and focused instead on productivity improvements from new AI technology. With the second quarter coming to a close, earnings season is about to begin. Investors will be watching not only Q2 performance but also company guidance for insight into how AI adoption is helping operations and profitability.
In economic news, first-quarter GDP growth was revised down to -0.5% in the final estimate, below the earlier reading of -0.2%. The Atlanta Fed’s latest estimate for second-quarter GDP growth sits at 2.9%, a sharp improvement over the first quarter.
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 rallied recently following a low inflation reading earlier in June. Inflation in May ran below the Federal Reserve’s 2% target. Low inflation readings suggest that the Fed has room to lower interest rates, which would be beneficial for bond prices, as bond prices and yields are inversely related.
The Fed’s next meeting is at the end of July. Market participants expect the Fed to hold rates steady, though there is a chance of a 25-basis-point cut. Market participants expect at least one rate cut by September.
Gold
The SPDR Gold Shares ETF (GLD), which tracks the price of gold, finished the week below its 50-day moving average but above its 200-day moving average.
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 11 years ago to track the daily price changes in the precious metal in a more tax-efficient manner than its ETF counterpart, GLD.
Indicators
The QFC S&P Pattern Recognition strategy’s primary signal started last week with a 130% net long exposure to the S&P 500. Exposure changed to 170% net long on Monday, 0% on Tuesday, 50% net short on Wednesday, 30% net short on Thursday, and back to 0% on Friday.
Our QFC Political Seasonality Index strategy started the week in a defensive stance, adopting a more aggressive posturing on Friday. (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 the week with 60% net long exposure to the NASDAQ 100, increasing to 80% net long on Monday before moving back down to 60% net long on Wednesday.
The Systematic Advantage strategy held a 90% net long exposure to the S&P 500 throughout the week.
Our QFC Self-adjusting Trend Following strategy’s primary signal was 200% net long 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 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 Low and Falling reading, which favors stocks over gold and then bonds from an annualized return standpoint. The combination has occurred 37% of the time since 2003. It is a stage of strong returns for stocks.