Investors More Upbeat About Markets, Says TD Ameritrade Strategist
Main Street felt far better about the markets in October than the prior month, especially regarding retailers like Wal-Mart (WMT) - Get Report and Starbucks (SBUX) - Get Report , said JJ Kinahan, Chief Strategist for TD Ameritrade (AMTD) - Get Report .
The TD Ameritrade Investor Movement Index, or the IMX read 4.79 in October, compared to 4.76 in September. The IMX tracks Main Street investor positions and activity to measure what investors are doing and how they are positioned in the markets.
After a brief dip to start the month, the equity markets stabilized and climbed higher in October. The S&P 500 and NASDAQ Composite both saw gains of greater than 7%, while the Russell 2000 was 3.5% higher to end the month. The Dow Jones Industrial Average saw strong gains in October, with an 8% increase month over month.
Kinahan said TD Ameritrade clients seemed to find some attractive prices on companies that have seen declines recently, including GoPro (GPRO) - Get Report and SunEdison (SUNE) , which were net buys. Both companies also saw analyst downgrades in October. He said retailers attracted client dollars with Wal-Mart, Amazon.com, and Starbucks all being net buys.
"Some people likely thought that the selloff in some of these names was a little overdone and did some bargain hunting," Kinahan said.
On the flip side, Kinahan said TD Ameritrade clients partially treated the October market rally as an opportunity to lighten up on some blue chip names including General Electric (GE) - Get Report and Microsoft (MSFT) - Get Report . He said McDonald's (MCD) - Get Report was net sold as well, although the company reached a new all-time high and was in the news with its announcement to serve breakfast all day.
"The retail trader may have been getting a little smarter and took the opportunity to take some money off the table with these stocks hitting 52-week highs," said Kinahan.