Investor Movement Index Summary: January 2020

TD Ameritrade clients increased equity market exposure for the fourth month in a row during the January IMX period. The IMX increased to 5.68, up 2.34%, from 5.55 the previous period, reaching the highest point since October 2018.

TD Ameritrade clients were net buyers during the January period, and net buyers of equities which pushed the IMX score higher. Market volatility was light early in the period but spiked the last week of January. The Cboe Volatility Index, or VIX, which measures the volatility of the S&P 500 Index, increased above 19 for the first time since October.

The January IMX period saw more all-time highs for equity markets. The S&P 500 crossed 3,300 for the first time ever, while the Dow Jones Industrial Average breached 29,000. Returns for the three major equities indices were mixed during the period. The S&P 500 and Dow were both down slightly, 0.5% and 0.7%, respectively, while the Nasdaq Composite increased 1.6%. Gains early in the period were helped by the U.S. and China signing a deal to ease trade tensions, and solid economic data including an unemployment rate that remained at a 50-year low of 3.5%. Volatility picked up later in the period as the coronavirus outbreak amplified, with the World Health Organization declaring it a global public health emergency, leading to concerns regarding global growth.

Trading

TD Ameritrade clients were net buyers of equities during the January period. Microsoft Corporation MSFT and Apple Inc. AAPL were both net buys, with each company beating on earnings and receiving multiple analyst upgrades during the period. Boeing Co BA announced it is pushing back its timetable for regulators to approve the return of the 737 MAX, sending the stock lower, and was net bought on the weakness. Advanced Micro Devices, Inc. AMD released a disappointing earnings result but received an analyst upgrade and was a net buy during the period. Walt Disney Co DIS traded lower as it announced it was shutting down its Shanghai location amid coronavirus fears, and was net bought. Virgin Galactic Holdings Inc SPCE received an analyst upgrade and price target increase during the period, and was net bought.

Additional popular names bought include AT&T Inc. T, Luckin Coffee Inc LK, and NIO Inc NIO.

Although they were net buyers, TD Ameritrade clients found some names to sell. Amazon.com, Inc. AMZN was net sold after beating on earnings as it benefited from strong holiday sales and stabilized shipping costs. Netflix Inc NFLX reported a bump in revenue and global net subscriber growth, even after adding fewer U.S. subscribers amid heightened streaming competition, and was net sold. Twitter Inc TWTR reached the highest price since October after a couple of analyst upgrades and was a net sell. Intel Corporation INTC was net sold after it reached the highest point in nearly 20 years after a beat on earnings and revenue estimates and raising guidance. Under Armour Inc UAA was net sold during a volatile period in which the stock moved +/-1% during 14 out of 23 days.

Additional names sold include Westinghouse Air Brake Technologies Corp WAB, Corteva Inc CTVA, and IQIYI Inc IQ.

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 reduced 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 four consecutive months to start the year. The IMX then rebounded in the spring of 2018 and continued higher during the summer on the back of better-than-expected earnings and increasing equity markets. The IMX headed higher during the fall of 2018 as economic growth increased before heading lower in late 2018 as the Nasdaq Composite entered a bear market to end the year.

Geopolitical issues were in the headlines during early 2019 as the U.S. and China traded tariffs. The IMX rebounded along with equity markets in the spring of 2019 on optimism of a trade deal with China and the unemployment rate nearing a 49-year low. The IMX remained range-bound during the summer of 2019 as trade-related policy concerns led to investors favoring less-risky assets, including fixed-income products. Heading into the fall of 2019, the IMX began to rebound and ended the year at the highest levels in over a year as trade war fears diminished and economic data began to improve globally.

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.