TD Ameritrade's Investor Movement Index: Clients Were Net Buyers of Equities in September
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 October 2015. 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.
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The October 2015 Investor Movement Index for the four weeks ending September 25, 2015, reveals:
- Reading: 4.76 (compared to 5.24 in August)
- Trend direction: Negative
- Trend length: 2 months
- Score relative to historic ranges: Middle
The IMX saw a steep decline to 4.76, as volatility within the equity markets persisted in September.
September saw the second-largest decrease in the IMX since publishing of the index began in December 2012. As we saw in August, many of the widely held positions within TD Ameritrade client accounts saw decreases in their volatility relative to the market, which pushed the IMX lower. TD Ameritrade clients were also net buyers for the month of September, which typically would work to increase the IMX reading; however, this month we saw volatility in many of those companies decrease at a faster rate than that of the overall market. This equated to a lower relative volatility and a lower IMX.
"Investors were highly engaged in September with major events happening including news from China and a Federal Reserve Board meeting," said JJ Kinahan, chief strategist, TD Ameritrade. "In fact, this was the second largest decrease in the history of the IMX, although clients were net buyers, they decreased their exposure to equity markets amid elevated volatility."
After a tumultuous end to August, the major equity market indexes continued to be under pressure to start the September IMX period after weak economic data from China spurred fears of an economic slowdown there. After that initial fear, the markets traded gradually higher through the first three weeks of the September IMX period, only to turn lower following the two-day meeting of the Federal Reserve Board. The Russell 2000 ended the period 3.45% lower, while the S&P 500 and NASDAQ Composite were off around 3%. The Dow Jones Industrial Average lost around 2% during the September IMX period. The much-anticipated Federal Reserve Board meeting and press conference resulted in an announcement that there would be no near-term increases to the Fed's key interest rate. The lack of action was attributed to concerns that global economic forces would restrain the domestic economy in the short term, and would likely keep downward pressure on inflation—both of which are key measures for the Fed's decision on raising rates.
Apple Inc. (AAPL), was a popular net buy in September. The company held a public event to announce a slew of updates to existing products early in the month. Basic materials issuers Exxon-Mobil Corp. (XOM) and Chevron Corp. (CVX) —both dividend payers yielding over 4%—were also net buys. Another popular dividend payer, Verizon Wireless Inc. (VZ), was also a net buy as it announced a new streaming video service. GoPro Inc. (GPRO), which has trended down towards its IPO price, was also a net buy.
Even with the overall markets trending lower, JC Penney Inc. (JCP) and Motorola Solutions Inc. (MSI) both hit 52-week highs in September. TD Ameritrade clients seemed to take advantage of the new highs by lightening positions, as both were net sold. Alcatel-Lucent (ALU) also trended higher during the period and was net sold, as it announced additional government approvals of its anticipated merger with Nokia Corp. (NOK). Yahoo Inc. (YHOO) was another popular name that was net sold, although it trended lower for the month as a stock lock up agreement expired for Alibaba Holdings Group (BABA), of which it owns a significant portion.
The IMX value is calculated based on a complex proprietary formula. Each month, TD Ameritrade pulls a sample from its client base of 6 million funded accounts that includes all accounts that completed a trade in the past month. The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly IMX.
For more information on the Investor Movement Index, including historical IMX data going back to December 2010, to view the full report from October 2015, 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.
For the latest TD Ameritrade news and information, follow the Company on Twitter, @TDAmeritradePR.
Source: TD Ameritrade Holding Corporation
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