TD Ameritrade Data Shows Retail Investors Are Becoming More Picky About Their Stocks

Retail investors spent April moving into less volatile names according to the TD Ameritrade Investor Movement Index, continuing a trend that started in December. 

The Investor Movement Index, or IMX, takes a sampling of TDA clients and measures data like holdings and trading activity to gauge investor activity. A rising IMX generally indicates rising bullishness, while a falling IMX indicates bearishness or a flight to safety.

Interestingly, TD Ameritrade clients were net buyers of equities during the month, but the increase in volatility in the most commonly held positions relative to the overall market caused the IMX to fall. 

According to TD Ameritrade's Shawn Cruz, the IMX's April 8.24 percent fall down to 4.79 is likely the result of investors reducing their exposure heading into earnings season and being a little bit more picky in general where they allocate their money. 

"I think it makes sense that as you see a higher VIX, investors aren’t going to be selling out, but they’re going to be a little bit more choosy," he said. "What the IMX is telling us is investors weren't getting out of equities, they were just trying to find less volatile names."

Most Common Buys

Netflix, Inc. NFLX, AT&T Inc. T, Advanced Micro Devices Inc. AMD, and Amazon.com Inc AMZN were all net buys by TDA clients, as were General Electric GE, Alibaba Group Ltd. BABA, and JP Morgan Chase & Co. JPM.

Interestingly, TDA clients also bought Spotify Technology SPOT on the heels of its much-anticipated IPO. 

Cruz said it makes sense that investors looked to Spotify to get exposure to potential early stage growth. 

Most Common Sells

Oil companies were popular sells for the month, including ConocoPhillips COP, BP p.l.c. BP, and Transocean Ltd. RIG all net sold. Investors also net sold Alcoa Corp. AA, Starbucks Corporation CMG. and Facebook Inc. FB in the midst of CEO Mark Zuckerberg's testimony before Congress.