US: TD Ameritrade IMX

Mon Apr 06 11:30:00 CDT 2015

Actual Previous
Level 4.75 4.70

The March 2015 Investor Movement Index for the four weeks ending March 27, 2015, showed a reading of 4.75, compared to 4.70 in February. The trend direction is positive with a trend length of 1 month. The sore relative to historic ranges is "middle."

TD Ameritrade clients increased their exposure to equities moderately in March. The new two-year low in the IMX registered last month, and the lower exposure to equity markets it represents, appeared to have served clients well as U.S. equity market indexes saw mixed returns from week to week, with the S&P 500, Dow Jones Industrial Average and NASDAQ all ending the period between 2% and 3% lower than where they began. Volatility in the S&P 500 as measured by the VIX was at a year-to-date low to begin the March IMX period, and remained low relative to recent levels throughout the month. Both equity markets and Treasury bonds traded higher immediately following the Federal Reserve policy statement, which indicated that the timing of any rate increase would still be dependent upon the Fed's economic goals and that the country had not satisfied these goals yet. Crude oil prices also continued to play a role in the markets, as their levels declined through the first half of the month on concerns about U.S. storage capacities reaching their limits.

The modest increase in equity market exposure came during a month where TD Ameritrade clients were net buyers of equities in dollar terms. Despite this broad net buying activity, the IMX remained in the middle of its historical range. This was due in part to a reduction in volatility relative to the S&P 500 for some of the most widely held names, which helped moderate the rise in equity market exposure from the net buying activity.

Continued price pressure on oil producers and energy related stocks appeared to translate into buying opportunities for clients as Exxon Mobile Corp. (XOM), Chesapeake Energy Corp. (CHK) and SeaDrill Limited (SDRL) were all net buys and saw declines in their values over the period. Names making headlines were also popular buys. Apple Inc. (AAPL) announced a new product and an exclusive partnership with HBO and was a net buy. Lumber Liquidators Holdings, Inc. (LL) stock price plunged at the end of February and continued to trade lower in March, which seemed to prompt some clients to buy the stock.

March saw net selling in popular financial names such as Citigroup (C) and American International Group (AIG). Both companies had court settlements announced in March and had rebounded back to near levels of resistance after hitting year to date lows in late January. Well known dividend payers Ford Motor Co. (F) and McDonalds Inc. (MCD) saw year to date highs in March and were also net sells. Alibaba Group (BABA), which has declined in price since a disappointing earnings result in January, appeared to find a level of support and was net sold as well.

The Investor Movement Index, (or the IMX) is a proprietary, behavior-based index created by TD Ameritrade designed to provide insight into Main Street sentiment. It measures what investors are actually doing, and how they are actually positioned in the markets. The IMX does this by using data representing the holdings/positions, trading activity and other data from an anonymous sample from six million funded accounts. These data are used to create a snapshot that can be monitored over time, or compared to other market indicators, to suggest the current sentiment of the real portfolios held by retail investors.

Wall Street often looks to TD Ameritrade, one of the largest online brokerage firms for insight into the mood, sentiment, and behavior of retail investors. Up to now, Wall Street has largely relied on opinion surveys - which measure what investors are thinking or what they're saying - to provide this information. With six million funded client accounts spanning investors of all ages, account sizes, and experience levels, TD Ameritrade is in a unique position to offer a quantitative, behavior‐based index that can better reflect what investors are actually doing.

The IMX can provide insight into whether investors are growing more bullish or bearish on equities.

The IMX measures the level of exposure of Retail Investor Portfolios to the U.S. equity market. The IMX has not been indexed to a specific year or normalized. Scores should be viewed in the context of historic ranges and recent trends. When reviewing month over month results and trends over time it's most important to put IMX values into context by considering historical ranges. For example, the historical range can be put into 5 quintiles - High, Moderately High, Neutral, Moderately Low and Low. The higher the score is the more bullish the level. Other important considerations include recent trends up/down and the duration of trends.