TD Ameritrade Clients Bought Lower Beta Stocks In April

TD Ameritrade’s Investor Movement Index (IMX) — a monthly behavior-based index that indicates the attitude of retail investors — reached a “Low” ranking in April compared to historic averages. The IMX decreased to 3.90 in April, down 6.25% from its March score of 4.16. 

Clients were net buyers of stocks in April, but their overall market exposure—measured by trading activity and volatility exposure—went down because of lower beta stocks. In other words, TD Ameritrade clients bought less volatile stocks in April as the market was rebounding off its March lows. 

“Although our clients lowered exposure overall, the stocks they did buy reflected where they believe consumer demand will return, although many of them may not be short term plays,” said JJ Kinahan, chief market strategist at TD Ameritrade.

Equity Markets Rebound

The April IMX period experienced a rebound after significant losses in March. The S&P 500 increased 11.6%, the Dow Jones Industrial Average was up 9.9%, and the Nasdaq Composite was up 15.1%.

The Dow industrials posted a daily gain of 1,600 points early in the month, as investors observed the benefits the stay-at-home order had in both the U.S. and Europe on slowing down infection rates. Those gains came in spite of over 20 million new unemployment claims filed, causing unemployment to reach historic levels.

What TD Ameritrade Clients Bought And Sold

For the second month in a row, TD Ameritrade clients were net buyers overall. Among the big-name companies that clients bought were: Delta Air Lines, Inc. DAL, Carnival Corp CCL, Boeing Co BA, and Bank of America Corp BAC.

And among companies that retail investors sold this month were: Otis Worldwide Corp OTIS, Westinghouse Air Brake Technologies Corp WAB, TENCENT HOLDING TCEHY, and Carrier Global Corp CARR.

“In April, clients increasingly took the long view with heavy buys in the Consumer Discretionary and Industrial sectors,” said Kinahan.

Photo by Aditya Vyas on Unsplash