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Retail Bears — Are They Coming Out of Hibernation?

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March 9, 2015
Retail Bears — Are They Coming Out of Hibernation?

This time around, it feels different.  In February, the TD Ameritrade Investor Movement Index® (IMXSM) fell to a new two year low.  The score has declined four out of the past five months.  But here’s the thing:   in each of the preceding declining months, clients were actually net buyers of the broad markets.  The score only declined because they were rotating into less risky lower beta positions.  Not the case in February.  In February, they were actually net sellers of equities.

FIGURE 1:

The TD Ameritrade Investor Movement Index® (IMXSM) hit a two-year low at the end of February. Source: TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

During the period, the S&P 500, Dow Jones Industrial Average, NASDAQ, and Russell 2000 indexes all posted gains greater than 4% for the period, with the NASDAQ ending the month within 2% of its all-time high. An easing of tensions surrounding the Greek debt crisis in Europe, Federal Reserve testimony that reaffirmed patience in raising rates, and a slight rebound in oil prices early in the month seemed to reduce volatility and boost the markets.  

But in the midst of all this positivity and euphoria, it appeared that our retail clients were taking some risk off of the table in the form of profit taking.  

What were they selling?
February saw net selling in Amazon (AMZN), Netflix (NFLX), and Twitter (TWTR). Each saw their prices rise to levels of resistance during the month. Clients appeared to take profits in Boeing (BA), whose stock price jumped higher following their earnings announcement at the end of January; the stock continued to climb in February. Sirius XM (SIRI) and JC Penney (JCP), both lower-priced names who have been popular with traders in the past, were also net sells.

What were they buying?  
Oil producers remained popular in February, as Exxon Mobil Corp. (XOM) and Chevron Corporation (CVX) were net buys. GoPro, Inc. (GPRO) and Alibaba Group (BABA), both familiar names who had their initial public offerings over the last year, saw declines in their prices in February and were also net buys. Apple Inc. (AAPL) was also a net buy, following their announcement that new products would be debuting in early March.

Popular long term holdings remained fairly stable and our retail clients continued to favor Apple (AAPL), Facebook (FB), AT&T (T), and General Electric (GE).

For more information on the Investor Movement Index, including historical IMX data going back to December 2010, to view the full report from February 2015, or to sign up for future IMX news alerts, please visit www.tdameritrade.com/IMX. Additionally, TD Ameritrade clients can chart the IMX using the symbol $IMX in either the thinkorswim® or TD Ameritrade Mobile Trader platforms.

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