Market Overview

The IMX Reaches A Six-Month High After May's Volatility

The IMX Reaches A Six-Month High After May's Volatility

After a shaky May for markets following the trade war drama between the US and China, TD Ameritrade's IMX, a monthly review of investor behavior based on its client's portfolio activity, reported a modest 7 percent increase from April's score of 4.61.

This is the highest IMX score in six months. However, this score is still considered "Moderately Low" compared to historic ranges.

Despite increased trade tensions, investors increased their overall exposure to equities throughout the month. Still, mounting pressure on the technology sector in the form of antitrust investigations into companies like Qualcomm (NASDAQ: QCOM) and Google parent company Alphabet Inc. (NASDAQ: GOOG) and the federal actions against Chinese tech firms like Huawei made an impression on investors.

New Entrants Gain Shareholders

Throughout May, TD Ameritrade clients were buyers in popular IPO names from the past year, including new entrants to the market like Uber Inc. (NYSE: UBER), Pinterest Inc. (NYSE: PINS) and Canopy Growth Corp. (NASDAQ: CGC). Uber and Pinterest both released their first earnings reports since their IPO and experienced bigger than expected losses, representing deep discounts in exciting new names.

On the other hand, Beyond Meat Inc. (NASDAQ: BYND) gained investors simply by being among the hottest stock on the market. Share price in Beyond Meat has gained more than 100% since its IPO last month.

Investors also funneled into Tesla Inc. (NASDAQ: TSLA) after its share price continued to fall to its lowest point in two years.

Chief Market Strategist with TD Ameritrade JJ Kinahan said investors were able to use May's volatility to their advantage through acquiring new stocks at cheaper prices.

"Investor anxiety in May led to a market sell-off, but many investors used that volatility and the lower prices to their advantage, adding some stocks to their portfolios at attractive prices," Kinahan said. "In the coming weeks, we'll be keeping a close eye on the Fed decision as investors hope for a long-anticipated rate cut."

Tech Loses Amid Tighter Regulations

Many tech companies saw investor selling, including Netflix Inc. (NASDAQ: NFLX) and Roku Inc. (NASDAQ: ROKU), which both posted gains over the volatile month. Investors in Roku took profit after shares of the company rose almost 42 percent following posting better-than-expected Q1 earnings. The company, which controls about 33 percent of the US streaming service market, also made announcements of the inclusion of new streaming services from The Walt Disney Co. (NASDAQ: DIS) and Apple Inc. (NASDAQ: AAPL) on its platform.

Facebook, Inc. (NASDAQ: FB), on the other hand, was also widely sold while the company faces the brunt of the tech sector's antitrust scrutiny. Facebook was criticized by Democratic presidential candidates and federal antitrust enforcers as being "too big." The FTC is considering looking into Facebook's acquisition of Instagram and Whatsapp, as well as how the company handles data privacy, but the latter is not related to antitrust concerns. Shares were down just over 8 percent at the end of May.

TD Ameritrade investors were also net sellers of industrial names General Electric Co. (NYSE: GE) and railway company Wabtec Corp. (NYSE: WAB). This comes in the wake of Wabtec's acquisition of GE Transportation.

Millennials Prefer Buying Aurora Cannabis, Lyft

In addition to looking into overall investor behavior, the TDA report also looked into the habits of millennial traders, who were net buyers of Aurora Cannabis (NYSE: ACB) as it continues international expansion. And, while Uber was a more popular investment choice overall, millennials preferred its ride-sharing competitor Lyft Inc. (NASDAQ: LYFT) after the company's better than expected first-quarter earnings.

Millennials were also bearish on many of the same tech companies as the general population, but they disproportionately unloaded shares of Twitter (NYSE: TWTR), taking profit after the company announced positive first-quarter earnings and a new approach to advertising on the platform.

Click here to read the full report.

Posted-In: IMX Investor Movement Index JJ KinahanLong Ideas News Short Ideas Top Stories Trading Ideas Best of Benzinga


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