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Market Overview

Investor Movement Index Summary: March 2020


Exposure to equity markets decreased in TD Ameritrade client accounts during the March IMX period. The IMX score decreased by 19.38%, moving to 4.16, down 1.00 from the previous period and reaching the lowest point in over seven years.

TD Ameritrade clients were net buyers overall during the March IMX period, after net selling last month. However, heavy buying among names with lower relative volatility had downward pressure on the IMX score. Equities were net bought, in addition to fixed-income products as market volatility increased. The Cboe Volatility Index, or VIX, which measures volatility of the S&P 500 Index, increased above 80 for the first time since November 2008.

The March IMX period saw market volatility increase to levels not seen since the financial crisis as the COVID-19 virus spread worldwide with the World Health Organization declaring it a pandemic. Markets officially entered bear market territory, or 20% below previous highs. The S&P 500 decreased 13.97% during the period, with the Dow Jones Industrial Average down 14.85%, and the Nasdaq Composite moving lower by 16.19%. Volatility was rampant for the entire period, with the S&P 500 having only one day with a move less than +/-1%, and the Dow Jones registering 12 days with a move greater than +/-1,000 points.

The Dow posted the worst day since October 1987, ending the 11-year bull market. The Federal Reserve reacted, decreasing the federal funds rate twice and announcing accelerating Treasury bond purchases in an attempt to increase economic activity. During the last week of the period, markets rebounded enough to end the shortest bear market ever as Congress and the Trump Administration passed a $2 trillion stimulus package aimed at helping businesses and consumers alike, with the Dow having its best week since 1938.


TD Ameritrade clients were net buyers of equities during the period, particularly in names impacted by the COVID-19 pandemic. Walt Disney Co (NYSE: DIS) was net bought as the company hit a 52-week low and announced it was closing its parks in Florida and California until further notice. Ford Motor Company (NYSE: F) traded under $4 for the first time since the financial crisis and was net bought. Industrials Boeing Co (NYSE: BA), Delta Air Lines, Inc. (NYSE: DAL), and American Airlines Group Inc (NASDAQ: AAL) were net bought as each company traded lower during the period. BA stated it would not participate in the $2 trillion government stimulus bill that included more than $50 billion in grants, loans, and tax breaks for passenger and cargo carriers, while AAL expects to receive $12 billion of aid. Microsoft Corporation (NASDAQ: MSFT) and Apple Inc. (NASDAQ: AAPL) were both net bought, with each stock receiving some positive analyst action during the period, and rumors of AAPL releasing a 5G phone this fall. Exxon Mobile Corporation (NYSE: XOM) traded to the lowest point in over 15 years as oil prices fell, and the stock was net bought as the dividend yield exceeded 9%. Cruise operator Carnival Corp (NYSE: CCL) fell to the lowest point since 1996 and was a net buy.

Additional popular names bought include General Electric Company (NYSE: GE), Tesla Inc (NASDAQ: TSLA), Bank of America Corp (NYSE: BAC), Occidental Petroleum Corporation (NYSE: OXY), and Zoom Video Communications Inc (NASDAQ: ZM).

Although they were net buyers, TD Ameritrade clients found some names to sell during the period. Activision Blizzard, Inc. (NASDAQ: ATVI) was net sold as the company received an analyst upgrade amid rumors of a mobile version of the popular game Call of Duty. Paypal Holdings Inc (NASDAQ: PYPL) was net sold as the company announced it is waiving certain fees and will be deferring repayments on business loans for some of its most affected small business customers. TENCENT HOLDING/ADR (OTCQX: TCEHY) was net sold during a volatile period in which the stock hit a 52-week low, but was mostly unchanged from the previous period as a shift to e-commerce may benefit the company in the long run. Corteva Inc (NYSE: CTVA) was net sold after receiving an analyst upgrade and announcing that they had entered into a multi-year collaboration for the development of novel herbicides with AgPlenus. Cloud communications platform Twilio Inc (NYSE: TWLO) reached a 52-week low during the period due to concerns on revenue growth during the COVID-19 pandemic, and was net sold.

Additional names sold include Westinghouse Air Brake Technologies Corp (NYSE: WAB), IQIYI Inc (NASDAQ: IQ), and Fitbit Inc (NYSE: FIT).

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. Heading into the fall of 2019, the IMX began to rebound and ended the year at the highest levels in over a year as trade war fears diminished and economic data began to improve globally. In early 2020, the bull market ended as markets pulled back due to the COVID-19 pandemic, with markets experiencing volatility not seen since the financial crisis.

Historical data should not be used alone when making investment decisions. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision.

All investments involve risk including the possible loss of principal. Please consider all risks and objectives before investing.

Past performance of a security, strategy or index is no guarantee of future results or investment success.

The IMX is not a tradable index.

The IMX should not be used as an indicator or predictor of future client trading volume or financial performance for TD Ameritrade.


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