Investor Movement Index September Summary

Monthly Summary

The IMX increased for the 5th month in a row, rising to 6.23 in September, an increase of 7.04 percent from the previous period.

TD Ameritrade clients were net buyers during the September period, increasing their exposure to equity markets. Net buying, coupled with increasing relative volatility among some widely held names, including Apple Inc. AAPL, Facebook, Inc. FB, and General Electric Company GE, helped push the score above 6.0 for the first time since January. Despite a few heavy trading days early in the month, volatility was generally light for most of the period.

U.S. equity markets were mixed during the period. The Dow Jones Industrial Average and S&P 500 were both up, with the Dow up nearly 2 percent. The Nasdaq Composite took a breather, and was down 0.8 percent during the period. The Dow reached a record for the first time since January, inching closer to the 27,000 mark. The Federal Reserve raised its benchmark rate by another quarter-percentage point during the period, as expected by markets, and signaled one more rate hike this year. This marked the first time the Fed raised rates above 2 percent since the government's intervention in 2008 to prevent the liquidation of Bear Sterns. Tariffs were once again in focus, with the Trump administration and China trading tariffs, leading to canceled trade talks.

Trading

TD Ameritrade clients continued their buying activity in September. Amazon.com, Inc. AMZN was a net buy as the stock reached an all-time high on the back of multiple analyst upgrades. Apple Inc. AAPL, which released 3 new iPhone models during the period, also reached an all-time high and was net bought. Continuing its upward run, Advanced Micro Devices, Inc. AMD has risen 200 percent since the beginning of the year, and was a net buy. Tesla Inc. TSLA saw some volatility during the period after the SEC announced a lawsuit against CEO Elon Musk for misleading shareholders with a tweet, and was net bought. Alibaba Group Holding, Ltd. BABA was net bought after announcing Walgreens Boots Alliance Inc. WBA would launch a business-to-consumer platform on Alibaba to market beauty products to consumers in China.

Additional popular names bought include Ford Motor Company F, Nike Inc. NKE, and JD.com Inc. (ADR) JD.

TD Ameritrade clients were net sellers of Bank of America Corp. BAC and Citigroup Inc. C. Both stocks sold off near month-end as the Fed raised rates and the yield curve continued to flatten, causing some analysts to question near-term predictions for the sector. Oil and Gas companies Exxon Mobile Corp. XOM and ConocoPhillips Corp. COP were both net sold as oil prices continued higher, with COP reaching a 52-week high. Clients also appeared to take profits in chip makers Nvidia Corp. NVDA and Qualcomm Inc. QCOM. NVDA reached an all-time high, while QCOM hit a 52-week high, with each stock receiving multiple analyst upgrades.

Additional names sold include Starbucks Inc. SBUX and Qorvo Inc. QRVO.

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 four consecutive months to start the year. The IMX then rebounded in the spring of 2018, and continued higher during the summer on the back of better-than-expected earnings and increasing equity markets.

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