Net selling coupled with lower volatility of several widely held names drops score
August 09, 2016 — OMAHA, Neb.–(BUSINESS WIRE)–TD Ameritrade, Inc. (“TD Ameritrade”), a broker-dealer subsidiary of TD Ameritrade Holding Corporation (Nasdaq: AMTD), is today releasing the Investor Movement Index® reading for July 2016.
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 July 2016 Investor Movement Index for the four weeks ending July 29, 2016, reveals:
• Reading: 4.69 (compared to 5.00 in June)
• Trend direction: Negative
• Trend length: 1 Month
• Score relative to historic ranges: Middle
TD Ameritrade clients were net sellers of equities in July as the IMX decreased to 4.69.
The July IMX period saw a decline in exposure to the equity markets in TD Ameritrade client accounts.
Net selling of equities was a driver of the reduction in exposure, but lower volatility relative to the overall market of several widely held names like Apple Inc. (AAPL), Facebook Inc. (FB), and Bank of America Corp. (BAC) also contributed to the decline. The lower relative volatility of these names came in a month where the VIX, which measures volatility of the S&P 500, reached its lowest point year-to-date.
“July was no exception to a typical pattern we observe when markets advance to new highs,” said Nicole Sherrod, managing director of trading, TD Ameritrade. “Retail investors tend to take profits in stocks that have had significant moves to the upside and rotate into stocks that they find to be undervalued.”
The major market indices saw gains during the July IMX period, with the Russell 2000 and NASDAQ Composite posting advances greater than 8% and 9%, respectively. The S&P 500 and Dow Jones Industrial Average were both up around 6% after posting new all-time highs during the month and remaining range-bound near those highs to end the period.
The market gains came against the backdrop of an earnings season where more than half of the S&P 500 companies who had reported by the end of July registered earnings above estimates. The Federal Reserve Board met in July as well, and although the meeting resulted in no change to its key rate, its official statement included a note that “Near-term risks to the economic outlook have diminished,” which some analysts took as indication of less concern about global economic conditions than has been stated in previous months.
Still, some popular names were net buyers
Despite being net sellers of equities overall, there were some popular names that were net buys by TD Ameritrade clients in July. Amazon.com Inc. (AMZN) and Facebook Inc. (FB) were net buys ahead of their earnings announcements. Both beat analysts’ expectations and rose to new all-time highs late in the month.
Dividend-paying companies were popular buys with financial sector issuers Wells Fargo Corp. (WFC), Barclays PLC (BCS), and Bank of America Corp. (BAC), ending the period as net buys. Yield outside of the financial sector seemed to garner interest as well, as Ford Motor Co. (F) saw net buying too.
The sharp recovery and climb to new highs in the U.S. equity markets following the Brexit vote seemed to trigger some selling activity. Alibaba Group Holding Ltd. (BABA) was net sold, as was Intel Corp. (INTC). Both companies saw declines during the volatility earlier in the year but traded up to or very near their pre-volatility levels in July. Popular retailer Costco Wholesale Corp. (COST), which saw gains in July and traded near its all-time high, was net sold. Sirius XM Holdings Inc. (SIRI) rose to a new all-time high in July and was net sold as well. General Electric Co. (GE) rose to its highest point since 2008 and was also net sold.
The IMX value is calculated based on a complex proprietary formula. Each month, TD Ameritrade pulls a sample from its client base of 6 million funded accounts that 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 December 2010, to view the full report from June 2016, 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
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