Investor Movement Index July Summary

The IMX was unchanged from the previous period, remaining at 5.45 during the July period.

TD Ameritrade clients were net buyers during the July IMX period, increasing exposure to equity markets. Net buying was offset by lower relative volatility among some widely held names, including Apple Inc. AAPL, Amazon.com Inc. AMZN, and General Electric Company GE, resulting in no change to the IMX score. Volatility of the S&P 500 was light during the period, with the index not having a daily move in excess of +/-1%.

Strong gains were seen across all three major U.S. indices during the period. The S&P 500 and Dow Jones Industrial Average both saw healthy gains, up 3.7% and 4.9%, respectively. The NASDAQ Composite also had a positive month, and was up 3.0% even with the volatility at month end. Earnings were in focus during the period, especially among Tech companies. Through the end of the IMX period, over 50% of S&P 500 companies had reported earnings, with over 80% having reported a positive earnings surprise. Tariffs were once again in focus with almost half of companies reporting earnings referencing tariffs in their earnings call, and the Trump administration preparing to levy an additional $200 billion in tariffs on Chinese goods. The unemployment rate ticked up to 4.0% from an 18-year low of 3.8% the previous month as more job seekers entered the labor force.

Trading

Some popular heavyweights were among the net purchases by TD Ameritrade clients during the July IMX period. Netflix.com Inc. NFLX, Amazon.com Inc. (AMZN), and Microsoft Corporation MSFT were all net buys during the period. (NFLX) closed at an all-time high early in the period before selling off and ending down nearly 10% from June. (AMZN) and (MSFT) both reached an all-time highs during the period after both companies beat on earnings and received multiple analyst price target increases, and were net bought. Dividend payers AT&T Inc. T and Ford Motor Company F were also net buys. (T) was a net buy as the company posted upbeat earnings for its second quarter, helped by additional revenue from Time Warner after acquiring the company last month. (F) missed on earnings after rising commodity prices had a negative impact on quarterly results.

Additional popular names bought include General Electric (GE), iQiyi Inc. IQ, and Canopy Growth Corp. CGC.

TD Ameritrade clients did appear to find some attractive exit prices in July. Walmart Inc. WMT was net sold after reaching a 3-month high during the period. Walt Disney Co. DIS reached a 52-week high during the period after shareholders approved the acquisition of Twenty-First Century Fox Inc. FOXA. Gilead Sciences, Inc. GILD reached a 4-month high during the period with the company beating on earnings and revenue. Bristol-Myers Squibb Co. BMY also traded higher after beating on earnings and receiving an analyst upgrade, and was net sold. Under Armour Inc. UA posted a wider-than-expected net loss due to restructuring charges, and was net sold. Snap Inc. SNAP announced it will discontinue its Snapcash mobile payment service partnership with Square Inc. SQ, and was net sold.

Additional names sold include Cisco Systems. Inc. CSCO, Exxon Mobile Corp. XOM, and Foundation Medicine, Inc. FMI.

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 pull back 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 three consecutive months to start the year.

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