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 IMXThe 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 CorporationTD 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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version on businesswire.com: https://www.businesswire.com/news/home/20181210005118/en/
Becky NiiyaDirector, Corporate Communications(402)
574-6652rebecca.niiya@tdameritrade.com
Jeff GoeserDirector, Investor Relations(402)
597-8464jeffrey.goeser@tdameritrade.com
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