Market Overview

Investor Movement Index March Summary

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TD Ameritrade clients increased exposure to equity markets during the March IMX period, with the IMX increasing to 4.65, up 1.31% from the previous period.

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TD Ameritrade clients were once again net buyers during the March period. Clients increased exposure to the market, and were net buyers of equities, driving the IMX higher for the second month in a row. Volatility of equity markets was generally light, with the S&P 500 moving +/-1% only three times during the period.

Equity markets were mixed during the March IMX period. The Nasdaq Composite and S&P 500 were both positive, increasing 2.7% and 1.5%, respectively. The Dow Jones Industrial Average was the market laggard, down 0.5% during the period. Overall, stocks rounded out one of the best quarters in nearly 10 years, with the S&P 500 up over 13%. Economic news was mixed early in the period. It was reported that the economy grew at 2.6% during the fourth quarter, while job gains came in lower than expected. The Federal Reserve held its benchmark rate steady, and signaled it wasn't likely to raise rates again this year. Internationally, there was political turmoil in the U.K. as Parliament voted down Prime Minister Theresa May's Brexit deal and failed to find an alternative solution.

Trading

TD Ameritrade clients were net buyers of equities during the period. Electric car makers Tesla Inc. (NASDAQ: TSLA) and NIO Inc. (NYSE: NIO) were net buys. TSLA saw a volatile month after unveiling the Model Y and announcing dealership closures, then reversing that decision, and was net bought on the weakness. NIO, China's electric TSLA rival, traded lower after a slowdown in deliveries was greater than expected. Aurora Cannabis Inc. (NYSE: ACB) was a net buy as the House Financial Services Committee passed a bill to provide a safe harbor for banks that work with the legal cannabis industry. CVS Health Corp. (NYSE: CVS) announced it would begin carrying cannabidiol-infused products in eight states, and was also net bought. AT&T Inc. (NYSE: T) was net bought for the third month in a row after announcing a direct-to-consumer streaming service scheduled for later this year.

Additional popular names bought include Kraft Heinz Co. (NASDAQ: KHC), Twilio Inc. (NYSE: TWLO), and Ford Motor Company (NYSE: F).

Despite being net buyers of equities overall, TD Ameritrade clients found some names to sell. FAANG stocks were popular sells during the period, with all but one being net sold. Amazon.com, Inc. (NASDAQ: AMZN) was net sold as the stock reached the highest levels since early December, and was up over 9% during the period following an analyst upgrade. Facebook, Inc. (NASDAQ: FB) was net sold for the fourth month in a row. The company continues to experience volatility under scrutiny from lawmakers, with the U.S. Department of Housing and Urban Development charging the company with violating the Fair Housing Act late in the period. Netflix Inc. (NASDAQ: NFLX), which is up over 50% from December lows, announced it was testing a 250 rupee ($3.62) per month subscription fee for mobile devices in India, and was net sold. Apple Inc. (NASDAQ: AAPL) was net sold following a 10% gain during the period as the company announced a new venture into the credit card space. Intel Corp. (NASDAQ: INTC) announced a deal with the U.S. Department of Energy to deliver the first exascale supercomputer, and was also net sold.

Additional names sold include Wabtec Corp. (NYSE: WAB), Alibaba Group Holding Ltd. (NYSE: BABA), and Twitter Inc. (NYSE: TWTR).

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.


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

 

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