TD Ameritrade Index Shows Retail Investors Were Pessimistic In February

TD Ameritrade’s Investor Movement Index (IMX) — a monthly behavior-based index that indicates the attitude of retail investors — reached a “Moderate Low” ranking in February, compared to historic averages, indicating increased fear among retail investors. 

The IMX decreased to 5.16 in February, down 9.15% from its January score of 5.68. The index goes up when clients are net buyers and goes down when clients are net sellers.

February’s decrease in U.S. stock exposure among TD Ameritrade clients comes in the wake of heightened volatility for equity markets, as concerns over COVID-19 becoming a global pandemic rose.

The Market Turns Volatile

The market ended February with its worst weekly performance since the 2008 financial crisis. 

In the final week of the month, all three major indexes experienced a double-digit percent decline. The S&P 500 was down 11.49%, the Nasdaq was down 10.54%, and the Dow Jones Industrial Average was down 12.36%.

“Turbulence in the markets, particularly toward the end of the month, led retail investors to reduce their exposure in February, selling equities and buying historically less risky assets,  including fixed income,” said JJ Kinahan, chief market strategist at TD Ameritrade.

What TD Ameritrade Clients Bought And Sold

During the month, TD Ameritrade clients were net sellers of equities. Clients used the price deductions as an opportunity to buy some big-name companies, such as Microsoft Corporation MSFT, Apple Inc. APPL, Walt Disney Co DIS, and Gilead Sciences, Inc. GILD.

And among companies that retail investors sold this month were Amazon.com, Inc. AMZN, Netflix Inc NFLX, Twitter Inc TWTR and Square Inc SQ.

“We’ll be keeping a close eye on the market volatility that lies ahead as the global health impact of coronavirus becomes more clear and the Federal Reserve’s rate cut plays out,” said Kinahan.