Investors exercise less exposure to equity markets
and at the same time are net buyers in the new year
OMAHA, Neb.–(BUSINESS WIRE)–TD Ameritrade, Inc. (“TD Ameritrade”), a broker-dealer subsidiary of TD Ameritrade Holding Corporation (NYSE: AMTD), is today releasing the Investor Movement Index® reading for January 2015. 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 January 2015 Investor Movement Index for the four weeks ending January 30, 2015, reveals:
- Reading: 4.85 (compared to 5.12 in December)
- Trend direction: Negative
- Trend length: 1 month
- Score relative to historic ranges: Middle
The IMX fell to a two-year low of 4.85, and TD Ameritrade clients have positioned their portfolios to have less exposure to equity markets than in previous periods.
U.S. equity markets headed into January at record levels but, similar to last January, equities started the year by declining approximately 5% for the month. Global economic concerns seemed to ignite a flight to safety trading, as a rally in U.S. Treasuries eventually drove the yield on the 10-year note below 1.7%, its lowest level since May 2012, and precious metals rallied to multi-month highs. Oil prices and oil-related companies remained under pressure throughout January.
The decline in the IMX indicates that clients have a more cautious portfolio posture. An IMX reading of 4.85 puts the index in the middle of its historical range. Although the IMX declined, that doesn’t necessarily mean that clients were net sellers; clients were actually net buyers in January. The IMX measures overall equity market exposure. This month’s decline was driven by the way clients have positioned their core portfolio holdings over multiple periods and how volatile those core holdings were relative to recent equity market movements. The end result of client portfolio allocations was less leverage to equity markets during the recent rise in volatility, and a lower IMX reading.
“After a volatile end to 2014, our clients started 2015 on a measured note as they looked to use increased volatility to their advantage,” said JJ Kinahan, chief strategist, TD Ameritrade. “As Energy lead the news, we saw some increased desire for exposure in that space.”
TD Ameritrade clients continued to be net buyers of oil producers. BP PLC (BP), Chevron Corporation (CVX), and ConocoPhillips (COP) all saw continued downward pressure on their stock prices, eventually finding some support in the middle of the month, and were net buys. Net buying also occurred in familiar names that pay dividends, including Disney (DIS), AT&T (T), and General Electric (GE).
The January IMX period saw net selling in retailers JC Penney (JCP) and Rite Aid (RAD), who both reported favorable sales figures. Both companies saw their stock prices plunge last fall, but prices have risen since then. Names making headlines with analyst upgrades in January, like Whole Foods Market (WFM) and Lululemon (LULU), were also popular sells. Sirius XM (SIRI) and Alcatel-Lucent (ALU), which are both lower-priced securities that saw multi-month lows in October, were net buys as they returned to price levels seen before their October declines.
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 January 2015, 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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