Equity exposure turns slightly more defensive as volatile sectors see mid-month selling

The Investor Movement Index^® (IMX^SM) declined slightly to 8.22 in October, down from 8.66 in September. The IMX is TD Ameritrade’s proprietary, behavior-based index, aggregating Main Street investor positions and activity to measure what investors actually were doing and how they were positioned in the markets.

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TD Ameritrade October 2021 Investor Movement Index (Graphic: TD Ameritrade)

The reading for the five-week period ending October 29, 2021 ranks “High” compared to historic averages.

“In a period where the S&P 500 outperformed the Nasdaq 100, our clients’ rotation into lower volatility or defensive sectors was not an unexpected move,” said JJ Kinahan, chief market strategist, TD Ameritrade. “This kind of behavior of turning to lower beta stocks is how we arrived at a slightly lower – but still historically on the higher end – IMX score despite retail investors at TD Ameritrade being net buyers during the period.”

Equity markets started the month of October cautiously as the possibility of the U.S. reaching its debt ceiling loomed and uncertainty surrounding the impact of rising input costs on companies’ profit reporting in the upcoming earnings cycle took hold of investors. With the banks reporting solid earnings and many companies beating analyst expectations, the market charged to new all-time highs as equity buying surged at the close of the month. All major sectors moved higher during the period except the Communications Sector, which came under pressure and underperformed the rest of the market. After snapping a seven-month streak of positive gains in September, the S&P 500 once again had a strong month.

TD Ameritrade clients were net buyers overall during the October IMX period, although there was some selling mid-month in higher volatility sectors. Some of the popular equity names bought during the period were:

• Apple Inc. (AAPL)
• Meta Platforms Inc. (FB)
• NVIDIA Corporation (NVDA)
• Lucid Group Inc. (LCID)
• Microsoft Corporation (MSFT)

Names sold during the period include:

• Tesla Inc. (TSLA)
• General Electric Company (GE)
• Wells Fargo & Co. (WFC)
• American Airlines Group Inc. (AAL)
• Carnival Corp. (CCL)

About the IMX

The IMX value is calculated based on a complex proprietary formula. Each month, TD Ameritrade pulls a sample from its client base of funded accounts, which includes all accounts that completed a trade in the past month. The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly IMX.

For more information on the Investor Movement Index, including historical IMX data going back to January 2010; to view the full report from October 2021, 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 thinkorswim Mobile platforms.

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold. All investments involve risk including the possible loss of principal. Please consider all risks and objectives before investing.

Past performance of a security, strategy, or index is no guarantee of future results or investment success. Historical data should not be used alone when making investment decisions. Please 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.

About TD Ameritrade

TD Ameritrade provides investing services and education to self-directed investors and registered investment advisors. A leader in U.S. retail trading, we leverage the latest in cutting edge technologies and one-on-one client care to help our clients stay on top of market trends. Learn more by visiting www.amtd.com.

Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) / SIPC (www.SIPC.org), a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2021 Charles Schwab & Co. Inc. All rights reserved.

Source: TD Ameritrade, Inc.

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