Market Update 8/31/26

By Will Hubbard

Market snapshot

•  Equities: U.S. stocks finished mixed last week. The S&P 500 Index rose 0.50%, the NASDAQ Composite gained 0.85%, and the Dow Jones Industrial Average added 0.55%, while the small-cap Russell 2000 Index fell 1.46%.

•  Fixed income: Treasury yields moved lower last week. The 10-year Treasury yield fell from 4.735% to 4.720%, while intermediate- and long-term Treasury bonds remained in a downtrend.

•  Gold and commodities: Gold fell 3.21% last week, while the U.S. Dollar Index rose 0.91%. Crude oil also weakened over the trailing five sessions.

•  Market indicators and outlook: FPI’s tactical strategies were generally positioned long during the week as they tried to identify trends based on their underlying algorithms. 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 Rising, which favors stocks over gold and then bonds.

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Equities

The SPDR S&P 500 ETF Trust (SPY) closed last week above both its 50-day and 200-day moving averages, maintaining its longer-term uptrend.

However, market participation was relatively narrow: Only four of the 11 S&P 500 sectors finished higher for the week, led by Information Technology, which gained 1.80%. Because the Index is weighted by market capitalization, gains in a few of its largest sectors can push the S&P 500 higher even when most sectors lose ground.

Bespoke Investment Group noted in its August 21 report that dispersion, or how differently individual stocks move from one another, had fallen from near-record highs. Historically, lower dispersion has been a constructive signal for stocks, though September and October have often been seasonally challenging. That combination may warrant some caution heading into the seasonally weaker months.

Fixed income

Bonds remained in a downtrend last week even as the 10-year yield edged lower. The iShares 7-10 Year Treasury Bond ETF (IEF) and the iShares 20+ Year Treasury Bond ETF (TLT) both closed below their 50-day and 200-day moving averages, indicating that their longer-term trends remained weak. The 10-year Treasury yield fell modestly, from 4.735% to 4.720%.

Bespoke Investment Group’s August 28 report showed that the two-year Treasury yield has been relatively steady over the past six months despite above-target inflation and continued investment in artificial intelligence infrastructure.

Bespoke’s August 27 market dashboard showed relatively modest changes in credit spreads. Corporate spreads registered a 10-day rate of change of 2.0 and a 50-day reading of 7.0, while high-yield spreads registered readings of -2.0 and -1.0, respectively. A credit spread is the extra yield a corporate bond pays over a Treasury security of similar maturity, while the rate of change measures how quickly that spread is widening or narrowing. Those relatively small readings on both the investment-grade and the high-yield sides suggest that credit spreads were not showing signs of significant stress heading into month-end.

Gold and commodities

Gold gave back much of its recent gains last week, falling 3.21%. COMEX gold futures slipped 3.22%. At the same time, the U.S. Dollar Index rose 0.91%.

A stronger dollar can weigh on gold by making the metal more expensive for buyers using other currencies. However, the dollar’s move was a fraction of the metal’s decline, so most of the work was done by bullion itself.

The SPDR Gold Shares ETF (GLD) closed last week at $408.89—above its 50-day moving average but below its 200-day average. That is a crack in the trend, not a break.

Crude oil also weakened over the trailing five sessions. Bespoke Investment Group’s August 27 market snapshot listed West Texas Intermediate crude oil at $83.61 and showed a negative five-day move. The stronger dollar may also have weighed on crude prices, though the data does not establish it as the sole driver.

For investors, the broader commodity complex offered little offset to gold’s weakness. The Quantified Gold Futures Tracking Fund returned -3.57% for the week, close to gold’s own move and a reminder that a dedicated gold allocation can experience the full impact of a sharp decline in the metal. Gold can play an important diversification role, but it does not provide protection in every market environment.

Flexible Plan Investments (FPI) is the subadviser to the only U.S. gold mutual fund, The Quantified Gold Futures Tracking Fund. 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.

The indicators

The QFC S&P Pattern Recognition strategy started the week 150% long, reduced exposure to 110% on Monday, returned to 150% on Tuesday, reduced exposure to 120% on Thursday, and ended the week only 60% long.

The QFC Political Seasonality Index began the week in its risk-off posture, moved to risk-on on Monday, and returned to risk-off on Wednesday’s close. (The QFC Political Seasonality Index—with all of the daily signals—is available after 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 advantage these strategies offer investors is their ability to adapt to changing market environments—participating during uptrends and moving to a defensive posture during downtrends.

The Volatility Adjusted NASDAQ strategy started the week 160% long and moved to 140% long on Friday’s close. The Systematic Advantage strategy remained 120% long throughout the week. The QFC Self-Adjusting Trend Following strategy started the week in cash and moved to 200% long on Wednesday, where it remained through Friday. These strategies can employ leverage, so their exposure may exceed 100% at times.

Our Classic model was fully risk-on all week. Most Classic accounts follow a signal that can change exposure within a week, though a few remain on platforms requiring up to a month to adjust to new signals.

Flexible Plan’s Growth and Inflation measure, one of our Market Regime Indicators, 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 75% of the time since 2003 and has been a positive regime state for stocks, bonds, and gold. Stocks have the highest rate of return in Normal periods. Gold has the second-highest return but has also experienced high drawdowns in these environments.

Our S&P volatility regime is registering a Low and Rising reading, which favors stocks over gold and then bonds from an annualized return standpoint. The combination has occurred 22% of the time since 2003.