What TD Ameritrade's IMX Tracker Can Do For Investors, And What It's Been Telling Us

TD Ameritrade's Investor Movement Index (IMX) is one of the few indicators that measures investor sentiment. It's created by averaging TD Ameritrade Investor's positions, trading activity and other data. The IMX is updated every month and has been published since December 2012.

How It's Calculated

The IMX is calculated by a similar way in calculating beta weighting, which is a method of analysis that considers the percentage of each position in a portfolio to create a diagnosis of risk and profit, but instead relies on proprietary models.

Each IMX data point is the median of a changing sample of individual scores and each score is rated equally no matter how large each portfolio is.

Below are the monthly IMX release dates for this year:

• Tuesday, September 6, 2016
• Monday, October 10, 2016
• Monday, November 2, 2016
• Monday, December 5, 2016

Related Link: July's Recovery Triggered Selling Activity In A Few Big Names

How You Can Use It

If the IMX increases month over month, investors are getting more bullish. If the IMX decreases, investors are getting more bearish on U.S. equities. TD Ameritrade urges users to not view the IMX's absolute value but rather the strength of the trend or the disruption to it.

For example, "If the index decreased from one month to the next after hitting a new high, that may be because investors are taking profits and reducing exposure to the market. But relative to other periods, the score is still high – indicating that portfolios are still bullish," according to TD Ameritrade.

Interpreting This Month's Results

The July IMX indicated a decline in equity exposure driven by net-selling. Lower volatility in Apple Inc. AAPL, Facebook Inc FB and Bank of America Corp BAC contributed to the decline.

The decline in equity exposure came during a month of S&P 500 and other index gains as the majority of stocks releasing earnings in July beat estimates.

Key Net Buys:

Amazon.com, Inc. AMZN,Facebook, Netflix, Inc. NFLX, and Tesla Motors Inc TSLA were very popular net-buys during July. Wells Fargo WFC, Barclays BCR and Bank of America were among the most popular dividend net buys for the month between TD Ameritrade investors as well. If strong net buying continues, these companies may outperform the general market.

Key Net Selling:

Alibaba BABA, Intel INTC, Costco COST, Sirius XM SIICF, Exxon Mobil XOM, Sprint S, and Linkedin LNKD were popular net sells despite positive overall July share movement in most of these stocks. If net selling continues, these stocks may underperform the S&P 500.

You can view the IDX here.