Retail Investors Keep Buying This Market

If sentiment among retail investors is to be believed, this bull market is stronger than ever.

TD Ameritrade's Investor Movement Index (IMX), which measures retail investor sentiment, increased to 7.4 in October, just shy of a record high. The higher the IMX, the more positive TD Ameritrade clients are feeling about the market.

Among the most bought stocks for October were NVIDIA Corporation NVDA and Micron Technology, Inc. MU, which have both doubled in 2017. Alibaba Group Holding Ltd BABA and JD.com Inc (ADR) JD were also net buys for the second month in a row.

According to TD Ameritrade Director of Trading Victor Jones, this positivity is the result of economic data that supports a strong fundamental environment.

"I think supporting economic data, as well as the fundamental earnings data, helped our clients to become a little more risk tolerant given the fundamental environment," he said.

This positivity comes despite large policy question marks out of Washington. One year after the election, we still don't have clarity on how tax cuts, health care, or infrastructure spending will impact the markets. But according to Jones, underlying fundamentals are overpowering those unknowns.

See Also: October IMX Overview: Tech And Banks Remain Popular; Energy Gets Sold

"There was obviously the $1 trillion infrastructure plan which we don't have clarity on at this point," he said. "But just look at the earnings for companies like Boeing Co BA or Caterpillar Inc. CAT. A lot of these names in the space had very solid earnings growth."

"For tax reform, yes we don't have clarity. But from an investor standpoint it's encouraging that we're starting to see action vs. the early rhetoric we saw. So there are signs of progress there. We're now talking 260,000 jobs added as a disappointment. The underlying fundamentals and strength are showing themselves. Yes, there is clarity yet to be had, but the actual numbers we're getting is obviously showing underlying economic strength and investors are participating as markets move higher."