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: Despite some downturns in the market last week, the S&P 500 remains approximately 2% off its recent all-time highs. The Index has traded higher 23 out of the last 30 weeks.

•  Bonds: Treasury yields rose 3 basis points last week, trading toward the lower end of its bull channel. The 10-year Treasury yield closed at 4.50% and is currently trading below its 50-day moving average.

•  Gold: Gold fell 0.28% last week, maintaining a relatively stable trading range. The yellow metal is currently testing its 50-day moving average for support.

•  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.


The major U.S. stock market indexes were mostly down last week. The S&P 500 decreased by 0.49%, the NASDAQ Composite was down 1.09%, the Dow Jones Industrial Average lost 0.88%, and the Russell 2000 small-capitalization index rose 0.04%. The 10-year Treasury bond yield rose 3 basis points to 4.50%, taking Treasury bonds lower for the week. Spot gold closed the week at $2,327.33, down 0.28%.

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 maintains price action above the 50-day moving average after dipping below it during April’s sell-off. The Index continues to trade well above its 200-day moving average. If momentum continues, a retest of late-May all-time highs is likely, less than 2% away. Since the October low, the market has faced one major bout of selling pressure, the pullback in April.

Much of the economic calendar aligned with expectations last week. The Commerce Department released its personal consumption expenditure (PCE) price index report Friday. Core PCE prices, which exclude food and energy, are considered the Federal Reserve’s preferred inflation gauge. The index rose 0.2% in April, down from the previous two months, indicating a period of calming inflation pressures following January’s 0.5% spike. Additionally, the Case-Shiller index of housing prices (major U.S. cities) rose 7.4% over the year ending in March, the highest level since October 2022.

As markets approach all-time highs, Bespoke Investment Group analyzed how recent equity and bond returns compare to historical averages. The following chart shows the S&P 500’s annualized total return over one, two, five, 10, and 20 years compared to its historical average for those same periods. The second chart shows current returns on a percentile basis relative to all other periods.

Equity returns have been well above average over the last year, ranking near the 80th percentile relative to all other one-year periods. The last two-, five-, and 10-year returns are also above average, though not as much as the one-year period. However, 20-year returns are modestly below the historical average.

Long-term Treasurys are at unprecedented levels. The loss of 7.4% over the last year ranks just below the 10th percentile relative to all other periods. The two-, five-, 10-, and 20-year returns are also significantly low. Shockingly, the 10-year returns for a 10-year Treasury are barely positive at 0.4% annualized.

Although markets were mostly down last week, the S&P 500 traded higher in 23 out of the 30 weeks leading up to Memorial Day weekend. Since World War II, there have been only a handful of other periods where the Index had 23 or more positive weeks in a 30-week span, including in January 2018 and in 2004.

The following chart shows the performance of the S&P 500 since 1945 on a log scale. The red dots represent each of the 10 other periods when it was up in 23 of the 30 prior weeks, with no other occurrences in the prior six months. Interestingly, these types of streaks never marked a significant peak in the market. There were multiple periods when the Index was lower over the following three and six months. Looking out one year later, returns were in line with the historical norm. All periods since 1945 were over 60% positive (bottom of the following table).

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 lacks momentum.

When markets exhibit positive momentum, many of our momentum-based strategies adjust to more risk-on positioning. 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, 2.99%) to the iShares Core US Aggregate Bond ETF (AGG, 1.68%). The Quantified Managed Income Fund is an actively managed income fund that can seek various income classes and 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 achieved risk and drawdown management during the bond market downturns in 2023 and the subsequent leg down this year.


The yield on the 10-year Treasury rose 3 basis points last week, ending at 4.50%.

Last week, the 10-year Treasury struggled to move up toward the top of the current bull channel (black lines on the following chart) as it tested its 50-day moving average. Currently, prices are trading below the channel and 50-day moving average, with a sustained move out of the channel confirming the formation of a new price structure in the near term.

T. Rowe Price traders reported, “One prominent factor weighing on sentiment … appeared to be the Treasury Department’s midweek auctions of five- and seven-year notes, which were met with subdued demand (as indicated by the so-called bid-to-cover ratio). … The weak sales raised concerns that funding the U.S. deficit will drive up yields at a time when the Fed appears to be in no rush to cut rates.”


Gold fell 0.28% last week, trading within a narrow range. 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. However, gold is now testing its 50-day moving average for support.

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 80% long exposure. Exposure changed to 40% long at Tuesday’s close and then to 50% long at Thursday’s close. Our QFC Political Seasonality Index favored defensive positioning until Wednesday’s close when it moved into stocks. (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 200% long exposure to the NASDAQ, changed to 180% long at Wednesday’s close, and switched back to 200% long exposed at Thursday’s close. The Systematic Advantage (SA) strategy is 120% exposed to the S&P 500. Our QFC Self-adjusting Trend Following (QSTF) strategy was 200% long throughout last week. 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 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 higher returns and lower volatility for stocks relative to the other volatility regimes.

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