Equities stayed in favor with as markets reached record levels
January 06, 2015- 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 December 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 December 2014 Investor Movement Index for the four weeks ending December 26, 2014, reveals:
- Reading: 5.12 (compared to 5.11 in November)
- Trend direction: Positive
- Trend length: 1 month
- Score relative to historic ranges: Moderately High
“Our clients maintained a favorable outlook on equities, and were net buyers overall in December,” said Nicole Sherrod, managing director of trading for TD Ameritrade. “They continued to buy on the price dips in energy – and in particular, oil – as well as in consumer goods and mobile, while taking profits from popular financial, technology and retail names.”
In the fourth quarter in 2014, the IMX trended in the opposite direction of 2013. The index fell back to a lower level as equity market volatility increased considerably, compared to the low volatility environment of the last quarter of 2013, when the IMX increased rapidly while the S&P 500 marched steadily higher. The December 2014 IMX reading of 5.12 is relatively bullish, but is off from its December 2013 reading of 5.62, which is the high end of its historical range.
December 2014 in Focus
Volatility returned to U.S. equity markets in December as the continued decline in oil prices seemed to fuel global growth concerns. The S&P 500 reached its all-time high at the beginning of December, but fell 5 percent by the middle of the month before quickly recovering, as it had done with previous dips in 2014. In fact, the S&P 500 and the Dow Jones Industrial Average eventually climbed to fresh all-time highs heading into 2015.
Domestic economic data also continued to be generally positive in December. U.S. equity markets appeared to be stimulated by the Federal Reserve’s encouraging statements around the economy and that it will be “patient in beginning to normalize the stance of monetary policy.” Small caps stocks measured by the Russell 2000 appeared to be range-bound throughout the year, but finally broke through an upside resistance level at the end of December to record levels. By month’s end, the Nasdaq Composite was within a few hundred points of its high in 1999 during the dotcom boom.
Similar to November, the December IMX period saw clients buying shares of names that saw price declines. Oil producers remained popular, with net buying activity in Halliburton (HAL), Chevron Corporation (CVX) and BP p.l.c. (BP), as the falling price of crude oil took their stock prices to new 52-week lows. The energy sector was not the only one where declining prices led to net buying. Consumer goods companies Apple (AAPL) and GoPro (GPRO) were net buys after their stock prices fell. Mobile services providers AT&T (T) and Verizon Communications (VZ) were popular buys; their stock prices dropped in December to levels at or near the lows for the year, driving their dividend yields higher. Both companies have dividend yields around 5 percent. Additional names bought included Kinder Morgan Inc. (KMI), Twitter (TWTR), Southwest Airlines (LUV) and Transocean (RIG).
December’s net selling activity also resembled that of November. Over the past month, many TD Ameritrade clients sold popular names in the financial sector, including: Bank of America (BAC), Citigroup (C) and American International Group (AIG). The technology sector’s Facebook (FB), Yahoo (YHOO) and Cisco Systems (CSCO) also saw net selling activity. Stock prices of retailers Target (TGT) and Walgreens (WAG) had sharp rises in December and were popular sells. Whole Foods Market (WFM), Pfizer (PFE) and Oracle (ORCL) were also sold.
Retail Investors Stayed Bullish in 2014
TD Ameritrade clients were net buyers overall in 2014, keeping their portfolios bullishly positioned heading into 2015. These investors remained heavily invested in the broad markets over the past year by primarily buying S&P 500 Index options (SPX), followed by the SPDR S&P 500 ETF Trust (SPY). Apple (AAPL), Facebook (FB) and Tesla (TSLA) rounded out the ranks of the top five names bought.
The first part of 2014 saw the IMX rise amid global geopolitical tensions, but it remained range-bound throughout the spring and summer, even as equity markets continued to climb higher with generally positive domestic data. The energy sector began to attract the interest of TD Ameritrade clients early in the fourth quarter of 2014 and buys of names in this space accelerated into December. In fact, a look at individual sectors reveals that energy names were purchased most frequently over the past year, with information technology and consumer discretionary rounding out the top three sectors bought by these investors.
“Our clients began easing up on the gas pedal a bit in the fourth quarter of 2014 by taking profits in momentum names with strong price appreciation and rotating into lower-beta, higher-yielding names,” said Sherrod. “By moving more money off the sidelines and out of cash, they established a lower-risk posture in the markets.”
As of December 31, 2014, the most widely held stocks by TD Ameritrade retail clients in 2014 were Apple (AAPL), General Electric (GE), Bank of America (BAC), Microsoft (MSFT) and Facebook (FB).
For more information on the Investor Movement Index, including historical IMX data going back to December 2010, to view the full report from December 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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