TD Ameritrade Clients Remained Bullish Through January: 'Where else are they going to put their money?'

TD Ameritrade’s Investor Movement Index (IMX) — a monthly behavior-based index that indicates the attitude of retail investors — reached its highest point in 15 months in January, indicating that clients were net buyers of U.S. stocks during the month. 

The IMX hit a score of 5.68, up 2.34% from its December score of 5.55. This is the highest recorded score since October 2018. The index goes up when clients are net buyers and goes down when clients are net sellers.

January’s increase in U.S. stock exposure among TD Ameritrade clients comes in the wake of a volatile month on Wall Street, as stocks hit all-time highs despite the spread of a new coronavirus in China in the back half of the month. 

The Effects Of An Outbreak

Some of the changes in the past month’s report could be a result of the coronavirus. The recent outbreak increased market volatility, with the CBOE Volatility Index rising above 19 for the first time since October as the World Health Organization declared it a global health emergency.

As volatility increases and uncertainty around the coronavirus continues, market watchers are still unsure how the effects of the virus will play out on Wall Street. One possible reason for the market’s relative strength as the virus continues to get worse is the belief that investors have grown numb to global risk in the wake of the trade war with China. 

“They’re already used to something hanging over the market with an unknown end date,” said TD Ameritrade Chief Market Strategist JJ Kinahan. “Earnings have come out and they were decent, we’re near all-time highs, and the other part of it is where else are they going to put their money?”

What TD Ameritrade Retail Investors Bought And Sold

Among the stocks that were net buys by TD Ameritrade clients in January are Microsoft Corporation MSFT, Apple Inc. AAPL, Boeing Co BA, Walt Disney Co DIS, Virgin Galactic Holdings Inc SPCE and Advanced Micro Devices, Inc. AMD.

And among the stocks that were net sold are Amazon.com, Inc. AMZN, Netflix Inc NFLX, Twitter Inc TWTR, and Intel Corporation INTC.

Examining the entertainment business, Walt Disney Co DIS was a net buy as Netflix Inc NFLX was a net sell.  

“We’ve seen that a couple of times now over the last few months,” said Kinahan. “People realize the expense Netflix has to keep inducing in order to produce great shows. I think people are starting to become more aware of the risks of Netflix.”