Current market environment performance of dynamic, risk-managed investment solutions.
By Daniel Poppe
Market snapshot
• Stocks: Stocks were lower last week. The NASDAQ Composite fell 0.64%, the Russell 2000 decreased by 0.58%, the S&P 500 declined 0.30%, and the Dow Jones Industrial Average lost 0.15%.
• Bonds: The 10-year Treasury yield rose from 4.14% to 4.20%.
• Gold: Spot gold rose 2.03%, closing above $3,700 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 remain near all-time highs but took a breather last week as investors awaited the release of third-quarter earnings reports. Those reports will help determine whether the recent rally was justified, as investors assess the impacts of AI, tariffs, and the landmark spending bill passed in July.
Thursday saw an upward revision to second-quarter GDP growth, moving from the previous estimate of 3.3% to a final estimate of 3.8%. With the third quarter coming to a close, the Atlanta Fed’s GDPNow model is projecting growth of 3.9% for the period.
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 dipped in the second half of September. The Federal Reserve delivered its first interest rate cut of 2025 during the month, but the move was widely anticipated, and bonds had already rallied in advance. Investor expectations for additional rate cuts have since moderated.
The Fed’s next meeting is scheduled for October 29. According to CME Group’s FedWatch tool, markets currently expect another 25-basis-point cut, with the possibility of additional easing later this year.
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, increased to 30% net long on Wednesday, rose to 90% net long on Thursday, and ended the week 130% net long.
Our QFC Political Seasonality Index strategy was defensive throughout last 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 held a 200% net long exposure to the NASDAQ 100 throughout the week.
The Systematic Advantage strategy started the week 90% net long to the S&P 500 but moved to 0% net long on Friday.
Our QFC Self-adjusting Trend Following Strategy’s primary signal started the week 200% net long the NASDAQ 100, shifted to 0% on Thursday, and returned to 200% net long on Friday.
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 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.