2018 begins and ends with volatility as retail
investors wait for clarity on economic, political concerns
Following a rocky month for the U.S. stock market, the TD
Ameritrade1 December Investor Movement Index®
(IMXSM) continued its downward trend for the third consecutive
month to 4.41, a 16 percent decline from its November reading of
5.27. 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 December 2018 Investor
Movement Index (Graphic: TD Ameritrade)
The reading for the four-week period ending December 31, 2018,
puts the IMX at its lowest since April 2016, when it also hit 4.41
in response to a period of extreme market volatility. As such, this
reading ranks “Low” relative to historic ranges.
TD Ameritrade clients were net sellers of equities for the
second month in a row, although they were net buyers of Treasuries,
fixed income products and other lower volatility securities.
“December was a culmination of investor anxiety over future
economic growth and uncertain policy out of Washington,” said JJ
Kinahan, chief market strategist at TD Ameritrade. “I expect the
rise in volatility to continue until the market gets more clarity,
particularly on trade, and we’ll see what happens with the next
round of earnings reports.”
Throughout December, the S&P 500 was down 9.9 percent, while
the Dow Jones Industrial Average was down 9.7 percent. The Nasdaq
Composite also headed lower and was down 10.2 percent, entering a
bear market, which is defined as a 20 percent drop from recent
highs. Late in the month, the Dow surged more than 1,000 in one
trading session, the largest one-day point gain ever, but it wasn’t
enough to overcome losses on the index for the period.
Many TD Ameritrade clients used December’s volatility to
acquire, frequently buying equities during market dips. Top equity
buys included:
- Apple (AAPL), as the company’s stock
traded lower based on demand worries in China.
- AT&T (T), as the stock reached a
52-week low during the period, despite an announcement that it’s
the first and only company in the U.S. to offer a 5G mobile
device.
- General Electric (GE), as the company’s
stock continued its decline, breaching the $7 mark for the first
time since the financial crisis.
- Altria Group (MO), after the company
made an investment in Juul, an electronic cigarette maker, during
the period.
- Bank of America (BAC) and JP Morgan
Chase (JPM), both traded lower amidst rising fears about economic
growth and future loan demand.
Throughout the month, retail investors at TD Ameritrade also
sold popular names, including:
- Facebook (FB), despite claims of making
strides in fake account identification to help prevent election
fraud, the company hit a 52-week low during the period.
- Twitter (TWTR), after receiving analyst
downgrades over concerns regarding content on the site.
- Alibaba Group Holdings (BABA), as the
company’s stock was swept up in the broad tech sell-off during the
period, trading at a 52-week low.
- Starbucks (SBUX), as the stock trended
lower after forecasting lower same-store sales growth along with
other negative news.
- Align Technologies (ALGN), after the
company continued trading at 50 percent lower over the past few
months.
- Procter & Gamble (PG), which was
among the few stocks net sold to hit a 52-week high during the
period, after receiving an analyst upgrade for trading at a
discount relative to its peers.
When compared to TD Ameritrade’s total client base, millennials
continued to find more value in pot stocks, with Aurora Cannabis
(ACB) and Canopy Growth (CGC) ranking among top traded stocks for
the age group. Popular stocks sold among millennials included
Twitter (TWTR) and Under Armour (UA).
2018 in ReviewThe five most popular stocks bought by TD
Ameritrade clients throughout the year were Amazon (AMZN), AT&T
(T), Netflix (NFLX), General Electric (GE) and Berkshire Hathaway
(BRK B).
The five most popular stocks sold throughout the year by clients
were Facebook (FB), Apple (AAPL), Bank of America (BAC), Chipotle
Mexican Grill (CMG) and ConocoPhillips (COP).
Volatility impacted the markets in early 2018, with the Dow
Jones Industrial Average dropping 4.6 percent on Feb. 5, 2018 – the
biggest one-day decline since August, 2011 during the European debt
crisis. In response, the IMX decreased for four consecutive months
at the beginning of 2018. The IMX then rebounded in spring and
continued rising during summer following better-than-expected
earnings and increasing equity markets. Today’s investor
uncertainty continues to fuel an ongoing IMX decline, which has so
far spanned Oct. – Dec. 2018.
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
December 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/20190107005729/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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