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Investor Movement Index (IMX) for June 2016

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July 5, 2016
What the Investor Movement Index (IME) tells us about the retail trading stock market.

Though uncertainty over Brexit brought caution in late June, retail traders remained net buyers for the third month in a row.

Retail traders tracked by TD Ameritrade added to their stock market exposure in June, according to the Investor Movement Index®, or the IMXSM.  The IMX rose to 5.00 in June, up from 4.87 in May, a relatively small move after May recorded the largest single-month increase in the history of IMX. Retail traders were net buyers the first three weeks of June, but trimmed their exposure to equity markets the last week of the month amid a general flight to safety immediately after the June 23 Brexit vote.

Increased volatility of a few widely held names relative to the overall market also helped increase the IMX, but trading in names that saw decreased volatility relative to the overall market during the roller coaster fourth week of June tempered gains. Judging by the index’s performance, it appears retail traders had the good sense to snap up shares of stocks that tend to be less volatile in turbulent times, and we certainly saw some turbulence around Brexit. In fact, volatility in the S&P 500, as measured by the VIX, reached its highest point in four months following the Brexit announcement. 

Even with the volatility, the IMX has now risen for three consecutive months, the first time that’s happened since last fall. In the accompanying video, you’ll get my take on the June IMX reading, and learn which stocks retail traders were buying and selling during the month. You’ll also learn about a sector where retail traders decided to take profits in some of the biggest names and exit after buying in May.

What stocks do retail traders seem to like best of late? You probably have these company’s web sites open on another window of your computer as you read this article, but don’t let your boss know you’re wasting time on them at work! Also, as we’ve seen all year, retail traders appreciate dividend stocks, and there was no end to that particular love affair in June. I certainly can’t blame them, considering the near-zero interest rate environment we all remain in.

Remember, this sophisticated index is a tool that lets you see what hundreds of thousands of actual traders were doing in June across all markets. Retail traders continued to show optimism in June, though they pulled back a bit when the Brexit storm clouds gathered and then burst. Markets quickly recovered a good portion of their Brexit-related losses by the end of the month, but will action in July show continued faith in the bull story? Wait and see.

Until next month,

Nicole

@TDANSherrod

Historical data should not be used alone when making investment decisionsPlease consult other sources of information and consider your individual financial position and goals before making an independent investment decision.

The IMX is not a tradable index. The IMX should not be used as an indicator or predictor of future client trading volume or financial performance for TD Ameritrade.

NC
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