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 Tim Hanna

Market snapshot

•  Stocks: Last week, the market rose to around 1% of all-time highs, led by Utilities and Consumer Staples.

•  Bonds: Treasury yields were essentially unchanged, trading in a relatively range-bound manner throughout last week. The 10-year Treasury yield closed at 4.50% and continued price action within its bull price channels right above its 50-day moving average.

•  Gold: Gold rose 2.55% last week, attempting to break out of the pullback that started in the second half of April.

•  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 S&P 500 increased by 1.89%, the NASDAQ Composite was up 1.17%, the Dow Jones Industrial Average gained 2.20%, and the Russell 2000 small-capitalization index rose 1.21%. The 10-year Treasury bond yield fell 1 basis point to 4.50%, taking Treasury bonds higher for the week. Spot gold closed the week at $2,360.50, up 2.55%.

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.


The S&P 500 Index reclaimed price action above the 50-day moving average after breaking below it in the second half of April. The Index continues to trade well above its 200-day moving average. If this momentum continues, last week’s move could position the Index to retest all-time highs, sitting around 1% away. Since the October low, the market has faced one major bout of selling pressure, the pullback in April.

Driven by continued momentum from the post-FOMC rally, stocks have shifted their trajectory from the tone set in April. From an economic standpoint, markets saw no surprises, although jobless claims hit their highest level since August 2023. Last week’s move occurred amid particularly low market volume. In global news, the U.K. successfully emerged from its recession.

With markets approaching all-time highs again, Bespoke Investment Group analyzed the driving forces behind this resurgence and how they’ve typically unfolded. The following chart shows how far each sector was from its 52-week high as of last Thursday (May 9). The two most defensive sectors— Consumer Staples and Utilities—were the first to return to their 52-week highs, a historically unusual occurrence. Technology, typically a frontrunner during such periods, was still down over 2.5%. This prompts the question: How bullish could a market led by Consumer Staples and Utilities really be?

Since 1989, the simultaneous occurrence of both the Consumer Staples and Utilities sectors hitting 52-week highs has been exceedingly rare, happening only once in December 2011, following a stretch of at least three weeks where no sectors achieved this milestone. The S&P 500 gained 15% over the next year in that instance. Of course, this is a sample size of one, so we have to take these results with a grain of salt.

Regarding the Utilities sector, last week’s 52-week high was its first since September 2022, breaking a 416-trading-day drought, the third longest for the sector since 1990.

The following table shows the forward performance of the Utilities sector and S&P 500 after each period during which the sector failed to reach a 52-week high for at least a year. One-month forward performance was mixed, with Utilities falling more often than not. However, from the three-month mark up to one year, returns were much more consistent and above average. This data suggests that new highs for Utilities haven’t been a warning sign for the overall market historically.

In March, Consumer Staples ended its second-longest streak without reaching a new high. The longest streak, which ended in February 2002, was six trading days longer.

The following table shows the performance of the Consumer Staples sector in the year after each period during which the sector failed to reach a 52-week high for at least a year. Unlike the forward performance of the Utilities sector, the Consumer Staples sector—and the overall market as represented by the S&P 500—saw relatively weak performance after the end of these streaks. The median one-year forward performance was 3.6%, with gains occurring two-thirds of the time. The overall market saw a median gain of about 2% with gains occurring only half of the time.

For some time now, markets have been driven by expectations of Federal Reserve fed funds rate cuts. However, data hasn’t suggested cuts are even in order yet. Looking back to last year, expectations would have suggested that the fed funds rate would have been cut by now or very soon. However, as time has passed, these expectations regarding the timing of cuts have been pushed further into the future.

The Federal Reserve’s dual mandate is to achieve maximum employment and maintain price stability. This is accomplished by controlling the money supply and adjusting interest rates in response to economic slowdowns or excessive growth.

There was plenty of evidence as inflation took off for the Federal Reserve to raise rates—few would dispute that. However, what prolonged and consistent signs have we seen of a slowing economy that would warrant rate cuts? That’s been a debate for quite some time now. Even expectations that the Fed will start cutting rates in the second half of 2024 are hard to get behind until we see the need in the data.

The Fed doesn’t base rate decisions solely on stock market movements. However, the rate hikes over the past few years have provided the Fed some leverage for when the overall data indicates it’s appropriate to act.

Bespoke Investment Group’s Consumer Heat Map is an excellent tool to visualize and track changes across various economic indicators, highlighting areas of strength or weakness in demand, budget, and trends. Bespoke surveys 1,500–2,000 Americans each month, in line with U.S. Census geographic distributions. The survey includes 100 questions grouped into six sections: sentiment, labor markets, personal finance, housing, activity, and investors. The recently updated data is presented visually below.

In April, respondent outlook was more negative. Almost all categories fell from the previous month, as shown in the inner ring of the heat map. However, on a year-over-year basis, readings are mixed.

Compared to last month, labor data weakened but not enough to flip the year-over-year data from neutral to negative. Housing data remained extremely weak, with demand falling to its lowest level in about a decade. Gas prices had the largest impact on the consumer sentiment category, which was only one of two categories showing improvement compared to a year ago. The consumer activity category saw significant declines across a wide range of consumer categories, with many experiencing material decreases year over year. Finances was the only category showing strength in April. Lastly, investor sentiment reflected reduced optimism among bulls during the 5% pullback markets experienced in April.

As markets attempt to retest all-time highs, it is important to incorporate dynamically risk-managed investment strategies that can adapt to changing market conditions as the changes are reflected in asset prices. This is especially important if the retest fails or the breakout has no momentum behind it this time around.

When markets exhibit positive momentum, many of our momentum-based strategies adjust their positioning to be more risk-on. If prices continue to rise, systematic trend-following algorithms are designed to identify and participate in the upward price momentum. Conversely, if volatility arises and prices decline, systematic momentum strategies are designed to identify the change and move to more defensive positioning. Mean-reversion strategies attempt to recognize and navigate sideways market conditions, offering an uncorrelated complement to momentum-based programs, which face challenges during trend-reversal inflection points.

The following chart compares the one-year performance of the Quantified Managed Income Fund (QBDSX, 1.87%) to the iShares Core US Aggregate Bond ETF (AGG, 0.54%). The Quantified Managed Income Fund is an actively managed income fund that can seek various income classes as well as the safety of cash when market exposure is undesirable. The Fund is a key defensive component in several actively managed strategies at Flexible Plan Investments. The active management within the Fund over this period was able to achieve risk and drawdown management during the leg down in bonds in 2023 as well as the second leg down this year.


The yield on the 10-year Treasury fell 1 basis point last week, ending at 4.50%.

Last week, activity in the bond markets was fairly range-bound compared to what fixed-income investors have been used to experiencing since 2021. The 10-year Treasury exhibited sideways price movement not far above its 50-day moving average last week. Following the pullback from late April, traders are now watching for the continuation of the bull price channel (black lines on the following chart).

T. Rowe Price traders reported, “The market absorbed the new supply readily, with the new deals experiencing strong demand from both retail and institutional buyers. … New deals in the investment-grade corporate market also generally saw healthy levels of oversubscription despite the primary calendar having its second-busiest week of the year in terms of new issue volume, with the volume almost doubling weekly expectations. Sentiment appeared to improve in the high yield bond market as equities traded higher.”


Gold rose 2.55% last week, attempting to break out of the pullback that started in mid-April. The “golden cross” (when the 50-day moving average crosses above the 200-day moving average), seen by technicians as a longer-term trend signal to the upside, is still in play. The 50-day moving average continues to slope upward following the April pullback.

Flexible Plan Investments 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. The Fund is used within some of our QFC strategies (such as our QFC TVA Gold) and can be used within our more customizable turnkey solutions, such as our QFC Multi-Strategy Core and Explore offerings. Our QFC Multi-Strategy Explore: Low Correlation strategy is currently weighted heavily to QFC TVA Gold.

The indicators

The very short-term-oriented QFC S&P Pattern Recognition strategy started last week with 50% long exposure. Exposure changed to 40% long at Monday’s close, 30% long at Tuesday’s close, 70% short at Thursday’s close, and 80% short at Friday’s close. Our QFC Political Seasonality Index favored defensive positioning 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.)

Our intermediate-term tactical strategies have been varied in their degree of defensive positioning. The key advantages these strategies offer to investors are their ability to adapt to changing market environments, participate during uptrends, and adjust exposure to more defensive posturing during downtrends.

The Volatility Adjusted NASDAQ (VAN) strategy started last week with 120% long exposure to the NASDAQ and remained 120% long exposed throughout the week. The Systematic Advantage (SA) strategy is 90% exposed to the S&P 500. Our QFC Self-adjusting Trend Following (QSTF) strategy started the week 100% long and changed to 200% long at Thursday’s close. VAN, SA, and QSTF 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.

Flexible Plan’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 the inflation rate and a positive monthly GDP reading). 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. From a risk-adjusted perspective, Normal is one of the best stages for stocks, with limited downside.

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 lower returns and higher volatility for all three major asset classes.

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