US: TD Ameritrade IMX


Mon May 04 11:30:00 CDT 2015

Actual Previous
Level 4.63 4.75

Highlights
TD Ameritrade's customers were net sellers of US stocks in April, driving down its index for a 2nd straight month to a new two-year low of 4.63 at a time when the stock market itself was pushing to new highs. According to the report, customers took profits on positions they had built up in prior months. The net sell side during April included JC Penney, Yahoo, Sirius, and GE. Net buys included Apple, AT&T, Starbucks, and Disney.

Definition
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.

Description
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.

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

Interpretation
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.