Market Overview

Investor Movement Index January Summary

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Monthly Summary

The IMX decreased for the fourth month in a row in January, moving down 2.95 percent to 4.28 from a previous score of 4.41.

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TD Ameritrade clients were once again net buyers during the January period. Buying among equities was light, with clients favoring less risky assets, including fixed-income products. This activity, along with decreasing relative volatility among widely held securities, including General Electric Company (NYSE: GE) and Microsoft Corporation (NASDAQ: MSFT), helped push the IMX score lower. Volatility of the S&P 500, as measured by the Cboe Volatility Index, was generally lower than during the December period.

U.S. equity markets rebounded during the January period. The S&P 500 and the Dow Jones Industrial Average were both up over 7 percent, with the Nasdaq Composite increasing nearly 9 percent. Markets reacted positively to some headlines during the period. Federal Reserve Chairman Jerome Powell stated early during the period that the Fed would be patient following tensions between financial markets and the economy, gesturing that there would be no looming rate increase. It was also reported that the U.S. added over 300,000 jobs during December, the fastest pace since February, as wages surged. Optimism around U.S.-China trade talks also helped push equities higher during the period.

Trading

TD Ameritrade clients were net buyers of equities during the January period. Apple Inc. (NASDAQ: AAPL) was a net buy as the company reached a 52-week low during the period and announced plans to release three new iPhone models this fall. AT&T Inc. (NYSE: T) was a net buy after Hulu, which is jointly owned by T, announced it was lowering the price of its basic, ad-supported subscription plan from $7.99/month to $5.99/month. General Electric announced a deal to combine its locomotive business with railroad parts supplier Wabtec Corporation (NYSE: WAB), and was net bought. Amazon.com, Inc. (NASDAQ: AMZN) was a net buy after announcing testing of Amazon Scout, an autonomous electric delivery project, in which robots deliver packages. Ford Motor Company (NYSE: F) was a net buy after missing on earnings during the period, while the CEO released a note rallying employees to double profit in 2019.

Additional popular names bought include Berkshire Hathaway Inc. (NYSE: BRK-B), Altria Group Inc. (NYSE: MO), and Microsoft.

Social media companies Facebook Inc. (NASDAQ: FB) and Twitter Inc. (NYSE: TWTR) were net sold once again during the January period. FB is among the technology companies that continue to face growing backlash regarding their increasing size and power from politicians, consumers, and even business partners, while TWTR CEO Jack Dorsey admitted that the company can do a better job at removing misleading information. Biotechnology companies Celgene Corporation (NYSE: CELG) and Gilead Sciences Inc. (NASDAQ: GILD) were both net sold during the period. CELG received multiple analyst upgrades and was up over 20 percent during the period, while GILD announced an immune-oncology partnership with Agenus Inc. (NASDAQ: AGEN). Bank of America Corp. (NYSE: BAC) was net sold after the stock rebounded from December lows following an analyst upgrade to the banking sector. Raytheon Company (NYSE: RTN) was up over 10 percent during the period after the company won multiple government contracts, and was net sold.

Additional names sold include Alibaba Group Holding Ltd. (NYSE: BABA) and JD.com. Inc. (NASDAQ: JD).

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.

Historical Overview

TD Ameritrade's Investor Movement Index (IMX) has generally correlated with the S&P 500 as clients react to equity price movements, but the index has gone through uncorrelated periods. Beginning in January 2010, when TD Ameritrade started tracking the IMX, the index rose with equity markets until April 2010, when it peaked at 5.40. In May 2010 investors experienced the "Flash Crash" and the IMX began a sharp downward trend. The IMX didn't reach 5.00 again until the S&P 500 was well above April 2010 levels. The index eventually peaked at 5.56 in June 2011. This peak was immediately followed by a plunge in equity markets, and in the IMX, as the media was dominated by the U.S. debt ceiling debate, S&P downgrade of U.S. debt, and European debt concerns. The S&P 500 began to recover in the fall of 2011, but the IMX continued to decline until it reached a new low at the time in January 2012. As the S&P 500 began to sustain an upward trend in early 2012, the IMX started to rise. In 2013, as economic conditions improved and the S&P 500 climbed to record levels, the IMX rose to the high end of its historical range, finishing 2013 at 5.62, and continued to rise in 2014 amid geopolitical tensions related to Ukraine and the Middle East, until seeing slight declines in October and November. By the middle of 2015 the IMX had seen increases, as equity market volatility had reduced to near historical levels while the market continued its upward trend. As 2015 ended its third quarter, volatility had returned to markets, as global economic concerns and speculation around the timing and trajectory of Federal Reserve rate increases seemed to rattle overall equity markets. This uncertainty continued to play a role in the equity markets through the fourth quarter of 2015 and into early 2016. The volatility accompanying this uncertainty abated in the second quarter of 2016 and remained low until late in the third quarter. Just as it had in 2015, the IMX saw increases mid-year during the period of lower volatility. The IMX continued to climb into the fourth quarter reaching 5.83 in October 2016, its highest point in two years. A brief spike in volatility during November, timed around the U.S. presidential election, coincided with a slight pull back in the IMX, which then ended 2016 at the high end of its historical range. The IMX started 2017 with an upward trend and reaching an all-time high in March, before pausing in April as lower volatility lead to a decrease in the IMX. The momentum resumed in May, with the IMX breaching 7.0 for the first time ever in July of 2017. The IMX took another brief pause in September, before following markets higher and breaching 8.0 for the first time ever in November and ending 2017 at an all-time high. Volatility returned to the markets in early 2018, and the IMX decreased for four consecutive months to start the year. The IMX then rebounded in the spring of 2018, and continued higher during the summer on the back of better-than-expected earnings and increasing equity markets.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

Posted-In: IMX Investor Movement Index TD AmeritradeNews Markets General

 

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