Current market environment performance of dynamic, risk-managed investment solutions.
By Daniel Poppe
Market snapshot
• Stocks: The major U.S. stock market indexes were lower last week. The NASDAQ Composite fell 1.50%, the S&P 500 declined 1.01%, the Russell 2000 lost 0.98%, and the Dow Jones Industrial Average decreased by 0.66%.
• Bonds: The 10-year Treasury bond yield fell from 4.14% to 4.19%.
• Gold: Spot gold fell 4.43%.
• Market indicators and outlook: Market regime indicators show the market is in a Normal economic environment, 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.
***
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 remained in a narrow trading range last week, hovering near highs seen over the past year. Activity has been limited since third-quarter results were reported, which largely met or exceeded investor expectations. Investors appear to be waiting for clearer evidence that the adoption of new artificial intelligence technologies is translating into meaningful benefits for companies.
With new quarterly reports scheduled to be released in a few weeks, investors will soon get another look at revenue and earnings growth across the economy.
Bonds
The iShares 7-10 Year Treasury Bond ETF (IEF), which tracks intermediate-term Treasury bonds, finished last week below its 50-day moving average but above its 200-day moving average.
Bonds have mirrored stocks in recent months, trading mostly sideways as investors try to gauge where interest rates may head in 2026. Inflation remains above the Federal Reserve’s target, tariffs are still in place, and unemployment has been creeping higher. Together, these factors complicate the Fed’s next policy decision.
The next Fed meeting is still a few weeks away. CME Group’s FedWatch tool currently suggests that investors expect no rate change at the January meeting. However, new data released before then could still influence the Fed’s decision.
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 a 60% net long exposure to the S&P 500. Exposure was reduced to 20% net long on Monday, rose to 60% net long on Tuesday, increased to 170% net long on Wednesday, and increased again to 190% net long on Friday.
Our QFC Political Seasonality Index strategy was aggressive throughout the 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 started the week with a 120% net long exposure to the NASDAQ 100. Exposure increased to 160% net long on Tuesday and declined to 140% net long on Friday.
The Systematic Advantage strategy held a 60% 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 at times 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—one of our Market Regime Indicators—shows that we are in a Normal economic environment, defined by positive monthly changes in both prices and GDP. A Normal environment has occurred 75% of the time since 2003 and has been positive for stocks, bonds, and gold. Stocks have delivered the highest rate of return in Normal periods, while gold has ranked second but has also experienced high drawdowns.
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 32% of the time since 2003 and has been associated with higher drawdowns for gold.