Investor Movement Index January Summary

The IMX recorded the largest month-over-month decrease in three years, as decreasing relative volatility among widely held names pushed the metric lower by -9.31% to 7.79.

Exposure to equity markets within TD Ameritrade client accounts declined during the January period, despite clients being net buyers overall. The reduced exposure was driven by lower relative volatility among widely held names, including General Electric Company GE, Apple Inc AAPL, and Amazon.com, Inc. AMZN. A slight spike in volatility of the S&P 500, as measured by the CBOE Volatility Index, or VIX, during the third week of the month contributed to the lower relative volatility among many widely held names.

The market rally continued during the January IMX period. The S&P 500 and Dow Jones Industrial Average both breached major milestones, at 2,800 and 26,000 respectively. Excluding dividends, the S&P 500 has increased over 300% since the bull market began in March 2009, making it the greatest bull market ever. The Dow also reached its latest 1,000 point mark in record-setting time, increasing from 25,000 to 26,000 in only seven sessions. The NASDAQ Composite closed at an inflation-adjusted record during the period, surpassing even the highs of the tech rally, following corporate earnings growth for six consecutive quarters. A new Federal Reserve Chairman was confirmed during the month, with Jerome Powell set to become the 16th chairman of the Federal Reserve. Powell confirmed during his confirmation that he is not planning sharp changes in monetary policy.

Trading

TD Ameritrade clients were net buyers of equities during the January IMX period. For the fourth month in a row, General Electric Inc. (GE) was a net buy. After increasing early in the period, the stock sold off later in the month as the company missed earnings estimates and announced an SEC investigation into its accounting practices. Widely held stocks Facebook Inc. FB and Amazon Inc. (AMZN) both reached all-time highs during the period, and were net bought. Caterpillar Inc. CAT, which received multiple third-party analyst upgrades during the past month and beat on earnings, was also a net buy. Boeing Co. BA climbed to an all-time high during the period and is up roughly 100% over the past year following strong demand in the Asia-Pacific market, and was net bought following a pullback late in the period. Bank of America Corp. BAC was net bought following better than expected earnings.

Additional popular names bought include Microsoft Corporation MSFT and Berkshire Hathaway Inc. BRK.

Following market gains, TD Ameritrade clients appeared to take profits in some names during the period. Healthcare players Gilead Sciences, Inc. GILD and Teva Pharmaceuticals Industries Ltd. TEVA were net sold. GILD received multiple analyst upgrades and traded near 52-week highs during the period, while TEVA traded at levels not seen since last summer after its cost-cutting plan resulted in an analyst upgrade. Sirius XM Holdings Inc. SIRI traded higher during the period and announced it added $2 billion to its stock buyback program, and was net sold. ConocoPhillips COP was a net sell as crude oil traded near a 3-year high and U.S. rig counts reached the highest point since September. Arconic Inc. ARNC traded at an 11-month high following freezes to its pension plan, and was net sold. After many retailers reported strong sales during the holiday shopping period, Macy's Inc M traded higher and was net sold.

Additional names sold include QUALCOMM Inc. QCOM and Chipotle Mexican Grill CMG.

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.

Historical Overview

TD Ameritrade's Investor Movement Index (IMX) has generally correlated with the S&P 500 as clients react to equity price movements, but the index has gone through uncorrelated periods. Beginning in January 2010, when TD Ameritrade started tracking the IMX, the index rose with equity markets until April 2010, when it peaked at 5.40. In May 2010 investors experienced the "Flash Crash" and the IMX began a sharp downward trend. The IMX didn't reach 5.00 again until the S&P 500 was well above April 2010 levels. The index eventually peaked at 5.56 in June 2011. This peak was immediately followed by a plunge in equity markets, and in the IMX, as the media was dominated by the U.S. debt ceiling debate, S&P downgrade of U.S. debt, and European debt concerns. The S&P 500 began to recover in the fall of 2011, but the IMX continued to decline until it reached a new low at the time in January 2012. As the S&P 500 began to sustain an upward trend in early 2012, the IMX started to rise. In 2013, as economic conditions improved and the S&P 500 climbed to record levels, the IMX rose to the high end of its historical range, finishing 2013 at 5.62, and continued to rise in 2014 amid geopolitical tensions related to Ukraine and the Middle East, until seeing slight declines in October and November. By the middle of 2015 the IMX had seen increases, as equity market volatility had declined to near historical levels while the market continued its upward trend. As 2015 ended its third quarter, volatility had returned to markets, as global economic concerns and speculation around the timing and trajectory of Federal Reserve rate increases seemed to rattle overall equity markets. This uncertainty continued to play a role in the equity markets through the fourth quarter of 2015 and into early 2016. The volatility accompanying this uncertainty abated in the second quarter of 2016 and remained low until late in the third quarter. Just as it had in 2015, the IMX saw increases mid-year during the period of lower volatility. The IMX continued to climb into the fourth quarter reaching 5.83 in October 2016, its highest point in two years. A brief spike in volatility during November, timed around the U.S. presidential election, coincided with a slight pull back in the IMX, which then ended 2016 at the high end of its historical range. The IMX started 2017 with an upward trend and reaching an all-time high in March, before pausing in April as lower volatility lead to a decrease in the IMX. The momentum resumed in May, with the IMX breaching 7.0 for the first time ever in July of 2017. The IMX took another brief pause in September, before following markets higher and breaching 8.0 for the first time ever in November and ending 2017 at an all-time high.

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.

All investments involve risk including the possible loss of principal. Please consider all risks and objectives before investing.

Past performance of a security, strategy or index is no guarantee of future results or investment success.

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.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.