Investor Movement Index (IMX) for April 2016

After three consecutive months of pulling back from equities, retail traders tracked by TD Ameritrade dipped their toes into a rallying stock market in April, according to the Investor Movement Index®, or the IMXSM. But in doing so, they stuck to the tried and true, and, in the case of one high-profile stock, became net sellers just in time.

The IMX rose to 4.41 in April, popping up from the 52-week low of 4.33 posted in March but remaining well below last year’s high levels. Retail traders didn’t flood back into the market as stock prices rallied, perhaps because they still felt uneasy about the way last fall’s rally turned into January’s sharp losses. That may help explain why dividend-paying stocks appeared popular in April. If you’re going to buy in an uncertain market, these are the type of stocks that tend to appeal.

In the accompanying video, you’ll get my take on the April IMX reading and learn which stocks retail traders were buying and selling during the month. You’ll also learn about the popular stock that turned into a net-sell in April prior to its disappointing earnings report. Not to say that retail traders always know best (though I think they often do), but this was an instance where they looked particularly smart in retrospect.

Remember, this sophisticated index is a tool that lets you see what hundreds of thousands of actual traders were doing in April across all markets. Retail traders seem to be maintaining their cautious stance, and didn’t let the strong spring rally cause them to make rash decisions. That helps reinforce what I’ve been saying about how thoughtful retail traders tend to be.