TD Ameritrade Investor Movement Index: IMX Drops Again as Market Volatility Continues
With an eye on market-moving events, retail investors adjust their
portfolios accordingly
Despite a late-month rally fueled by retail earnings, the TD Ameritrade1
November Investor
Movement Index® (IMXSM) continued its downward
trend for the second consecutive month to 5.27, a 14 percent decline
from its October reading of 6.10. The IMX is a proprietary,
behavior-based index, aggregating Main Street investor positions and
activity to measure what investors actually were doing and how they were
positioned in the markets.
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TD Ameritrade November 2018 Investor Movement Index (Graphic: TD Ameritrade)
The reading is currently at its lowest point since May 2018, when it
measured 5.06, and ranks “Moderately Low” relative to historic ranges.
Prior to October, the IMX trended upward for a five month period.
“Retail investors continued to engage with the market by increasing
their overall exposure, but reduced equity holdings in stocks for less
volatile investments, like fixed income related products. This shift
lowered the IMX reading,” said JJ Kinahan, chief market strategist at TD
Ameritrade.
Throughout November, U.S. equity markets responded positively to the
results of U.S. midterm elections, comments from Federal Reserve
Chairman Jerome Powell and strong holiday sales. Still, a variety of
concerns may have weighed on retail investors including rising interest
rates and slowing overseas economic growth coupled with geopolitical
issues and falling crude oil prices.
At its low point, the S&P 500 Index was down more than 10 percent from
its previous closing high two months earlier and Nasdaq fell even more
steeply. But by the end of November, the S&P 500 and Dow Jones
Industrial Average were both up in excess of 3 percent, while the Nasdaq
Composite gained more than 2 percent.
“U.S. stocks took a hit in November and ending the month in positive
territory may not have been enough to reassure investors,” said Kinahan.
“Concerns over the bond market and U.S.- China relations are top of mind
for investors, and we’ll need to keep an eye on interest rates and the
state of the economy moving forward.”
Many TD Ameritrade clients used November’s volatility to their
advantage, frequently buying equities during market dips. Top equity
buys included:
-
Apple Inc. (AAPL), which set expectations of lower iPhone sales in
2019 and was down 17.5 percent during the period.
-
Amazon.com Inc. (AMZN), after the company reported a slowdown in core
retail revenue growth before rebounding at month-end.
-
General Electric (GE), after the company reached its lowest point
since the financial crisis following concerns about the company’s
finance arm.
-
Nvidia Corp. (NVDA), which sold off roughly 18 percent following an
earnings miss during the period.
-
Netflix (NFLX), as a third-quarter beat on earnings was offset by
concerns regarding future profitability.
Throughout the month, retail investors at TD Ameritrade also sold
popular names, including:
-
Tesla Inc. (TSLA), which announced a new chairman to replace Elon Musk
and reached production of 1,000 Model 3’s per day.
-
Starbucks (SBUX), after rallying 10 percent following a beat on
earnings and multiple analyst upgrades during the period.
-
Procter & Gamble (PG), after announcing the successful completion of
its acquisition of consumer health business, Merck KGaA.
-
Teva Pharmaceuticals (TEVA) and Pfizer Inc. (PFE) were both net sold.
TEVA rallied early in the period after beating on earnings, while PFE
announced a distribution agreement with AbbVie.
As 2018 comes to a close, retail investors have plenty of potentially
market-moving events to consider in December. Geopolitical and trade
concerns, particularly around China, should continue to be a central
theme, as will Treasury yields and economic growth.
About the IMX
The IMX value is calculated based on a complex
proprietary formula. Each month, TD Ameritrade pulls a sample from its
client base of more than 11 million funded accounts, which includes all
accounts that completed a trade in the past month. The holdings and
positions of this statistically significant sample are evaluated to
calculate individual scores, and the median of those scores represents
the monthly IMX.
For more information on the Investor Movement Index, including
historical IMX data going back to January 2010; to view the full report
from November 2018; or to sign up for future IMX news alerts, please
visit www.tdameritrade.com/IMX.
Additionally, TD Ameritrade clients can chart the IMX using the symbol
$IMX in either the thinkorswim® or TD Ameritrade Mobile
Trader platforms.
Inclusion of specific security names in this commentary does not
constitute a recommendation from TD Ameritrade to buy, sell, or hold.
Past performance of a security, strategy, or index is no guarantee of
future results or investment success. Historical data should not be used
alone when making investment decisions. Please consult other
sources of information and consider your individual financial position
and goals before making an independent investment decision.
The IMX is not a tradable index. The IMX should not be
used as an indicator or predictor of future client trading volume or
financial performance for TD Ameritrade.
For the latest TD Ameritrade news and information, follow the company on
Twitter, @TDAmeritradePR.
Source: TD Ameritrade Holding Corporation
About TD Ameritrade Holding Corporation
TD Ameritrade
provides investing
services and education to
more than 11 million client accounts totaling approximately $1.3
trillion in assets, and custodial
services to more than 6,000 registered investment advisors. We are a
leader in U.S. retail trading, executing an average of approximately
800,000 trades per day for our clients, more than a quarter of which
come from mobile devices. We have a proud history
of innovation, dating back to our start in 1975, and today our team
of nearly 10,000-strong is committed to carrying it forward. Together,
we are leveraging the latest in cutting edge technologies and one-on-one
client care to transform lives, and investing, for the better. Learn
more by visiting TD Ameritrade’s newsroom at www.amtd.com,
or read our stories at Fresh
Accounts.
1TD Ameritrade, Inc. is a broker-dealer subsidiary of TD
Ameritrade Holding Corporation. Brokerage services provided by
TD Ameritrade, Inc., member FINRA (www.FINRA.org)
/SIPC (www.SIPC.org).
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