Market Overview

The Mad Search For Yield: TDA's JJ Kinahan Discusses September IMX Results


With TD Ameritrade’s Investor Movement Index (IMX) for September out last week, Chief Strategist JJ Kinahan offered some color to explain why investors fled to stocks like Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: TFacebook Inc (NASDAQ: FB) last month. 

“[Investors] were net buyers, but the stocks they purchased just had a higher volatility than the S&P 500 (INDEXSP:.INX)," he said. "You have to remember, for September, that volatility, measured by the CBOE Volatility Index (INDEXCBOE:VIX) was still near all-time lows. 

"One of the themes we’ve seen for the past few months, which continued certainly through September, is that people are in a mad search for yield,” he said, noting that the two telecom stocks have yields of more than 4 percent. 

The IMX, or Investor Movement Index, measures how bullish or bearish investors have been. When the index’s score rises, it means investors' recent past activity has leaned toward a bullish stance. When the score declines, investors' recent past activity has tended toward bearishness.

Facebook Inc (NASDAQ: FB), which is a retail favorite, continues to be a retail favorite," he added.

Over September, the IMX surged by 4.37 percent to 5.49, hitting its highest point in two years, driven by the elevated relative volatility that the lower overall volatility triggered. 

Kinahan also noted that Apple, Netflix, Inc. (NASDAQ: NFLX) and Alibaba Group Holding Ltd (NYSE:BABA) were all net sold over September. Interestingly, he said, all these stocks are near 52-week highs. “What this is showing, in my opinion, is that the retail trader is becoming smarter and smarter; they are taking profits when things go up. What this also shows is that, just like the professional trader, they really want to find some yield somewhere,” especially after the 10-year bonds rallied to 1.75 percent.


Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.


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