Investor Movement Index Summary For December 2012
Monthly Summary(IMX)
In December 2012, the S&P 500 was well above the highs seen in 2011. The IMX, however, has been slower to recover as client portfolios have indicated more cautious allocations than in past equity market rallies.
The IMX increased in December 2012 after remaining flat from October 2012 to November 2012, moving to the upper end of the 3-year range at 4.94. The last time the IMX climbed to the 4.94 level was in January of 2011, when both the S&P 500 and the IMX continued their upward trend. Over the last 6 months clients have increased their cash allocations, which typically is seen as an effort to reduce equity market exposure. However, market forces and specific buying activity were more powerful than cash movements, causing the IMX to rise. Clients, in general, tended to buy or hold securities with an increased level of volatility relative to the S&P 500, which in turn increased their overall level of equity market exposure. For example, Apple's (AAPL) volatility relative to the equity market increased in December, and our clients were net buyers of Apple shares - both of these factors helped the IMX move higher.
Trading
The technology sector has been a favorite among clients, and in December 2012 they increased their exposure to this sector by adding positions of widely held technology symbols. Within this sector, clients continue to hold Apple (AAPL) as a primary holding, while Apple (AAPL) has been under pressure over the last few months and declined in price 27% from its September 2012 high. In December 2012 Facebook (FB), Intel (INTC), and Microsoft (MSFT) rose from multi-month lows and clients were net buyers in these securities. Clients appeared to take profits in some widely held technology names, including Cisco (CSCO) and Google (GOOG), through an increase in selling activity.
Financials are another widely held sector by TD Ameritrade retail clients. Clients reduced aggregate holdings of commonly held financial names including Bank of America (BAC), Citigroup (C), and JP Morgan (JPM). Recent price strength from major industrials Boeing (BA) and Caterpillar (CAT) seemed to incent clients to sell positions prior to the end of the year.
Additional popular securities bought included: Freeport McMoran (FCX), Costco (COST)
Additional popular securities sold included: Ford (F), Pfizer (PFE)
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) is now available to the public! The Investor Movement Index, or IMX, is a proprietary, behavior-based index created by TD Ameritrade that is designed to indicate the sentiment of retail investors' portfolios. It measures what investors have actually been doing, and how they are actually positioned in the markets.
The January 2012 launch includes 3 years of historical data from January 2010 through December 2012. Each future release will include the overall score and a commentary.
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 increased with equity markets until April 2010 when it reached 5.40, the third highest point we've seen over the last few years. 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. The peak was immediately followed by a plunge in equity markets along with the IMX as the U.S. debt ceiling debate, S&P downgrade of U.S. debt and European debt concerns dominated the media. The S&P 500 began to recover in the fall of 2011, but the IMX continued to decrease until it reached a new low in January 2012. Once the S&P 500 seemed to have an established upward trend at the beginning of 2012 the IMX started to rise.
