Investor Movement Index

Elevated Volatility Continues to Buffer Markets

While equities struggled to sustain gains, strong earnings reports drove retail investor engagement in the markets

May 07, 2018 — OMAHA, Neb.–(BUSINESS WIRE)–The Investor Movement Index® declined for a fourth consecutive month in April 2018, slipping 8 percent from the prior month to 4.79, TD Ameritrade, Inc.1 announced today. 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 actually were doing and how they were positioned in the markets.

The April 2018 Investor Movement Index for the four weeks ended April 27, 2018 reveals:

Reading: 4.79 (compared to 5.22 in March)
Trend direction: Negative
Trend length: 4 month
Score relative to historic ranges: Moderately Low

Volatility Rising

As U.S. markets continued to experience elevated volatility relative to what has been experienced in recent years, TD Ameritrade clients lowered their overall exposure to equity markets, causing the IMX to drop in April. However, they still showed interest in a few specific names, including Apple Inc. (AAPL) and Amazon.com, Inc. (AMZN).

“Clients seemed to use the continued climb in oil prices to the 70 dollar level as an opportunity to rotate out of oil names, such as Transocean Ltd. and National Oilwell Varco, Inc., while the millennial population chose not to reduce exposure to energy stocks this month,” said JJ Kinahan, chief market strategist at TD Ameritrade.

  • TD Ameritrade clients were net buyers of some volatile names during the April IMX period, including:
  • Netflix, Inc. (NFLX), for a third consecutive month and following better than expected earnings
  • Amazon.com, Inc. (AMZN), for a fifth consecutive month and after beating earnings
  • AT&T Inc. (T), as the company traded lower following an earnings miss
  • Spotify Technology S.A. (SPOT), following the company’s IPO early in the period
  • Advanced Micro Devices, Inc. (AMD), as the company beat its anticipated earnings
  • Square, Inc. (SQ), as the company announced it would acquire the technology company, Weebly, Inc

Despite being net buyers, TD Ameritrade clients found equities to sell during the period, including:

  • ConocoPhillips (COP), as oil prices traded near 3-year highs on higher global demand
  • BP p.l.c. (BP), as it traded at multi-year highs
  • Transocean Ltd. (RIG) and National Oilwell Varco, Inc. (NOV), as both reached 52-week highs
  • Alcoa Corporation (AA), after trading at new highs following proposed tariffs on steel and aluminum

Markets continued to be volatile at the start of the April period as attention shifted from geopolitical tensions to earnings season. While elevated volatility carried over from March into April, the Cboe Volatility Index (VIX) retreated to monthly lows as the S&P 500 broke through what had previously been a major upside resistance level. This quickly changed as the yield on the key 10-year Treasury note was finally able to establish itself above the 3 percent level. As a result of this and tepid forecasts from CEOs, markets quickly fell lower and the VIX increased once again.

“Investors will likely continue to monitor corporate earnings, likely paying close attention to CEO comments, in addition to economic data pointing to inflationary pressures building in the economy for the remainder of May,” said Kinahan.

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 April 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 $1.2 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 more than 940,000 trades per day for our clients, nearly 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 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)