Market Overview

Investor Movement Index: November 2019

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Exposure to equity markets increased in TD Ameritrade Holding Corp. (NASDAQ: AMTD) client accounts during the November period. The IMX increased to the highest level in a year, increasing 0.33, or 6.8%, to 5.17.

TD Ameritrade clients were once again net buyers during the period. Less risky assets were in favor, including fixed-income products, while clients increased exposure to U.S. equity markets by buying more ETF products. Net buying in equities with increasing relative volatility also helped push the IMX higher. Market volatility was generally light during the period, with the Cboe Volatility Index, or VIX, having a closing price below 12 for the first time in over a year.

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Equity markets increased during the November IMX period, with all three major U.S. indices notching records. The S&P 500 increased past 3,100 for the first time ever, while the Dow Jones Industrial Average breached 28,000 for the first time, with the indices up 3.9% and 4.1%, respectively. The Nasdaq Composite produced the best gains, up 5.1%. Trade headlines once again helped markets move higher, as China said it would step up intellectual property protection and enforcement and called for Washington and Beijing to strengthen communications. The Federal Reserve indicated it is likely done cutting rates in the near term, and improving economic data helped ease fears of an impending recession.

Trading

TD Ameritrade clients were net buyers of Walt Disney Co (NYSE: DIS) during the November IMX period. The stock hit an all-time high during the period as Frozen 2 hit theaters, breaking a box office record for the Thanksgiving weekend, and Frozen 2 toys were popular as holiday shopping kicked off.

Microsoft Corporation (NASDAQ: MSFT) was a net buy as the company reported its Teams communication app reached 20 million daily active users, and the company received approval from the U.S. Department of Commerce for a license to export "mass market" software to China's Huawei Technologies. McDonald's Corp. (NYSE: MCD) sold off following an earnings miss late last period, and was net bought. Ford Motor Company (NYSE: F) was a net buy as it announced plans for an electric F-150 pickup truck, and offered a dividend yield in excess of 6%. Marvell Technology Group Ltd. (NASDAQ: MRVL) reached a 52-week high as the semiconductor company received an analyst upgrade and price target increase with MSFT using MRVL's ThunderX2 server processor for Microsoft Azure.
Additional popular names bought include Beyond Meat Inc (NASDAQ: BYND), Starbucks Corporation (NASDAQ: SBUX) and Energy Transfer LP Unit (NYSE: ET).

TD Ameritrade clients used market highs to sell some popular names. Big banks Bank of America Corp (NYSE: BAC) and Citigroup Inc (NYSE: C) both reached 52-week highs during the period as Federal Reserve Chairman Jerome Powell said he was comfortable with the current interest rate stance, and were net sold. Tesla Inc. (NASDAQ: TSLA) was net sold as the stock traded above $350 for the first time since January after unveiling its new Cybertruck. General Electric Company (NYSE: GE) reached a 52-week high after the company beat on earnings and hired a new CFO, and was net sold.

Caterpillar Inc. (NYSE: CAT) reached a 52-week high as tariff concerns eased, and was net sold. Netflix Inc (NASDAQ: NFLX) was net sold for the third month in a row as streaming wars continue to heat up. Unitedhealth Group Inc (NYSE: UNH) was net sold after it increased over 10% during the period as President Trump announced a rule that would require health care insurers to disclose estimate out-of-pocket costs to patients in advance of a procedure, but enforcement of such a rule remained in question.

Additional names sold include Facebook, Inc. Common Stock (NASDAQ: FB) and Intel Corporation (NASDAQ: INTC).
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 pullback 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. The IMX headed higher during the fall of 2018 as economic growth increased before heading lower in late 2018 as the Nasdaq Composite entered a bear market to end the year. Geopolitical issues were in the headlines during early 2019 as the U.S. and China traded tariffs. The IMX rebounded along with equity markets in the spring of 2019 on optimism of a trade deal with China and the unemployment rate nearing a 49-year low. The IMX remained range-bound during the summer of 2019 as trade-related policy concerns led to investors favoring less-risky assets, including fixed-income products.

 

Posted-In: IMX Jerome Powell Netflix Inc.News Federal Reserve Markets Trading Ideas General

 

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