TD Ameritrade’s Investor Movement Index (IMX) decreased to 4.16 in March, down 19.38 per cent from its February score of 5.16. The IMX is TD Ameritrade’s proprietary, behaviour-based index, aggregating Main Street investor positions and activity to measure what investors actually were doing and how they were positioned in the markets.
The reading for the four-week period ending 31 March, 2020, ranks “Low” compared to historic averages.
“Not since the financial crisis of 2008 have we seen this kind of volatility in the markets,” says JJ Kinahan, chief market strategist at TD Ameritrade. “This provided our clients with an opportunity to revisit their portfolios in a new world of temporary uncertainty, and they were attracted to companies with strong balance sheets that have previously weathered storms. Looking ahead, there’s a lot we don’t know, from the continued impact of the COVID-19 pandemic to the potential lift provided by the recently passed economic stimulus package.”
The March IMX period saw market volatility increase to historic levels. Markets officially entered bear market territory, or 20 per cent below previous highs. The S&P 500 decreased 13.97 per cent during the period, with the Dow Jones Industrial Average down 14.85 per cent, and the Nasdaq Composite moving lower by 16.19 percent. Volatility was rampant for the entire period, with the S&P 500 having only one day with a move less than plus or minus one per cent, and the Dow Jones registering 12 days with a move greater than plus or minus 1,000 points. The Dow posted its worst day since October 1987, ending the 11-year bull market. The Federal Reserve reacted, decreasing the federal funds rate twice and announcing accelerating Treasury bond purchases in an attempt to increase economic activity. During the last week of the period, markets rebounded as Congress and the Trump Administration passed a USD2 trillion stimulus package aimed at helping business and consumers alike, giving the Dow its best week since 1938.
TD Ameritrade clients were net buyers overall during the March IMX period, after net selling last month. Equities were net bought, in addition to fixed income products as market volatility increased and the Cboe Volatility Index (VIX), which measures volatility of the S&P 500 Index, increased above 80 for the first time since November 2008. Retail investors used a shorter time frame to trade in the first part of the month, as turnover was faster than normal and volatility was quickly changing, followed by heavier net buying later in month. Some of the popular names bought by clients during the period included:
• The Walt Disney Company (DIS)
• Ford Motor Company (F)
• Boeing Inc (BA)
• Exxon Mobile Corp (XOM)
Despite being net buyers during the period, TD Ameritrade retail clients did find some names to sell, such as:
• Activision Blizzard Inc (ATVI)
• Paypal Holdings Inc (PYPL)
• Tencent Holdings Inc (TCEHY)
• Fitbit Inc (FIT)
For the first time since TD Ameritrade began tracking the Millennial IMX, its score dipped lower than the general IMX, decreasing by 1.24, or 23.4 per cent, to 4.09 in March. Millennials held steady throughout the month, buying systematically as markets sold off. During this period, unique millennial buys included Royal Caribbean (RCL) and Uber (UBER).
In March, millennials did less selling than the general population, but the top names sold largely matched with those selected the total client base, including Tencent Holdings Inc. (TCEHY) and Fitbit Inc. (FIT).