Investor Movement Index June Summary

Monthly Summary

The IMX increased for the second month in a row, increasing 0.39 or 7.16 percent to 5.45 during the period.

TD Ameritrade clients appeared to use volatility during the June IMX period to increase their exposure to equity markets. Net buying was responsible for the second straight monthly increase in IMX score. Although volatility was relatively light during the period, TD Ameritrade clients used market pullbacks as buying opportunities. The CBOE Volatility Index, or VIX, which measures volatility of the S&P 500, spent most of the period below 15, with slight increases early and late in the period.

Equity markets were mixed for the June IMX period. The S&P 500 and Dow Jones Industrial Average both took a breather during the period, down 0.1 and 1.9 percent, respectively. The Technology sector once again posted gains, and the NASDAQ Composite increased 1.0 percent. Small cap stocks also increased, and the Russell 2000 reached all-time highs once again during the period before selling off near month end. Geopolitical risk continued during the period, with the U.S. and China threatening tariffs once again. The Federal Reserve also raised its benchmark rate another 0.25 percent in June, and signaled it could increase rates at a slightly faster pace this year to keep up with a strengthening U.S. economy. The Consumer Price Index reported a 2.8 percent increase in prices year-over-year, while unemployment held at its lowest level in nearly two decades, helping bolster a nine-year old economic expansion.

Trading

TD Ameritrade clients appeared to use volatility in some individual names as a buying opportunity during the June IMX period. AT&T Inc. T received approval for its acquisition of Time Warner and was a net buy following the stock moving lower late in the period. iQIYI Inc. IQ, the Chinese Technology company, and Micron Technology Inc. MU both traded lower late in the month following expectations of new rules regarding Chinese investment in tech firms from the Trump administration, and were net bought. Netflix.com Inc. NFLX was a net buy as the stock hit an all-time high. Salesforce.com Inc. CRM received an analyst upgrade and announced new innovations to deliver more personalized customer experiences, and was a net buy.

Additional popular names bought include General Electric Company GE, Canopy Growth Corp. CGC, and Cronos Group Inc. CRON.

TD Ameritrade clients were net sellers of Energy companies Chesapeake Energy Corporation CHK and Exxon Mobil Corporation XOM during the June period. Both companies traded higher on the back of a three-and-a-half year high in crude oil prices following increased pressure on Iran's oil industry, with CHK reaching a 52-week high. General Motors Company GM traded higher early in the period following the announcement that Softbank was investing over $2 billion into its autonomous driving program, and was net sold. For the fifth month in a row, TD Ameritrade clients were net sellers of Facebook, Inc. FB. The stock reached an all-time high during the period, lifting bans on crypto-currency ads while launching new tools to stop fake accounts. Chip-maker Advanced Micro Devices Inc. AMD was also net sold after reaching a 52-week high during the period before falling late in the month.

Additional names sold include Valeant Pharmaceuticals Intl Inc. VRX and Macy's Inc. M.

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 ebbed 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. Volatility returned to the markets in early 2018, and the IMX decreased for three consecutive months to start the year.

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