TD Ameritrade’s Investor Movement Index: IMX Reverses Course During the October Market Ride
TD Ameritrade, Inc. (“TD Ameritrade”), a broker-dealer subsidiary of TD Ameritrade Holding Corporation (NYSE:AMTD) , is today releasing the Investor Movement Index(R) reading for October 2014. The Investor Movement Index, or the IMXsm, is a proprietary, behavior-based index created by TD Ameritrade that aggregates Main Street investor positions and activity to measure what investors are actually doing and how they are positioned in the markets.
The October 2014 Investor Movement Index for the four weeks ending October 31, 2014, reveals:
- Reading: 5.22 (compared to 5.79 in September)
- Trend direction: Negative
- Trend length: 1 month
- Score relative to historic ranges: Moderately High
“Volatility returned to equity markets last month and investors quickly adjusted their portfolios,” said Nicole Sherrod, managing director for TD Ameritrade. “Many of our clients ramp up equity exposure during periods of low volatility, and dial back without panicking during short-term volatility.”
The IMX was sharply lower last month as volatility ruled the market during the October IMX period. Though still bullish, the 11 percent decline was the second largest drop since inception, with the IMX falling back to levels not seen since October 2013. The decline was not driven by net selling; in fact, TD Ameritrade clients were net buyers overall. Equity market exposure measured by the IMX declined in October because client portfolios were less volatile relative to the S&P 500 than in previous periods, driving the IMX down.
The major equity indexes declined through the first two weeks of the month amid global economic concerns, with the Russell 2000, S&P 500, Dow Jones Industrial Average, and Nasdaq Composite hitting lows that briefly wiped out 2014 gains. Treasury prices rose and the 10-Year Treasury yield dipped below two percent. The market decline was short-lived, and earnings season ramped up with generally positive results. Domestic economic reports were also largely favorable, and the equity indices bounced back to record levels to close out the month.
Despite the sharp recovery of the equity markets, there are still plenty of factors for investors to weigh in November: Japan announced strong stimulus plans while the U.S. Federal Reserve ended its quantitative easing program of asset purchases; commodity prices continued to fall, putting pressure on energy related stocks; and mid-term elections in the U.S. shifted the balance of Congressional power. Additional points of concern might include Ebola, tensions related to Russia or North Korea, and ISIS threats. As usual, there is no shortage of potential market flashpoints.
Price pressure and dividend yield were common among the securities that were net buys in the month of October. Dividend-paying oil producers, which have seen declines in their prices since July, were net buys – including Transocean (RIG), BP Plc (BP), and SeaDrill (SDRL). AT&T (T) and Ford (F) were also dividend payers that saw price dips in the middle of the month and were net buys. That said, net buying was not restricted to stocks under pressure. Apple (AAPL) and Alibaba (BABA) were popular buys and had positive returns for the October IMX period. Kinder Morgan (KMI), Tesla (TSLA), and Advanced Micro Devices (AMD) were also bought.
Citigroup (C), which has been under investigation for questionable activities in its FOREX trading business, was net sold. Sirius XM (SIRI) and Coca Cola (KO) both saw volatility around their earnings announcements, and were net sold. Manufacturers in the technology industry, like Corning (GLW), Cisco (CSCO), and Oracle (ORCL), were also popular net sells, as were Intel (INTC) and Yahoo (YHOO).
For more information on the Investor Movement Index, including historical IMX data going back to December 2010, to view the full report from October 2014, 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.
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About TD Ameritrade Holding Corporation
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