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 1.1%, the S&P 500 rose 1.25%, the Russell 2000 advanced 2.19%, and the NASDAQ Composite added 2.22%.
• Bonds: The 10-year Treasury yield rose from 4.06% to 4.14%.
• Gold: Spot gold rose 1.16% last week, closing above $3,600 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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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 have continued their steady climb since May, with the S&P 500 reaching an all-time high last week. The strong upward trend has been fueled by optimism about productivity gains from AI tools and expectations for lower interest rates. Concerns remain about potential tariff rates on imports and signs of strain in the labor market, but neither has slowed the market’s advance.
Third-quarter earnings season is just kicking off, with only a handful of companies reporting results so far. As more results come in over the following weeks, investors will be looking for revenue and earnings growth driven by AI adoption. Current market valuations are above historical norms, so the market could punish any missed expectations.
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 have risen to near year-to-date highs ahead of the Federal Reserve’s September meeting, where policymakers were widely expected to resume rate cuts that were paused at the beginning of this year.
The Fed delivered, cutting the federal funds target range by 25 basis points and shifting its policy stance in favor of ensuring full employment after months of weakening labor market data. Future easing will likely depend on whether inflation picks up from current levels, which may hinge in part on court rulings regarding the administration’s tariff policies.
The Fed’s next meeting is scheduled for October 29. According to CME Group’s FedWatch tool, markets expect another 25-basis-point cut. Both bonds and stocks could react favorably to another rate cut in October, and further easing later this year remains on the table.
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 0% exposure to the S&P 500. It shifted to 30% net long on Wednesday, moved to 20% net long on Thursday, and returned to 0% on Friday.
Our QFC Political Seasonality Index strategy was defensive throughout last week. (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 180% net long to the NASDAQ 100, increasing to a 200% net long exposure on Monday.
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 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 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 relatively low risk across the asset classes.