TDAmeritrade's Investor Movement Index is not based on what the institutions and banks are trading, but on the real investing of Main Street investors. The IMX dips again in May, but sentiment remains bullish on a relative, historical basis.
Market participants look at many measures to gauge investor sentiment, even though they don't always show an accurate picture. The CBOE Volatility Index(VIX), often referred to as the fear index, shows the market's expectation of 30-day volatility, but it does not parse out institutional or hedge fund activity. Surveys like the Thomson Reuters/University of Michigan Consumer Sentiment, AAII online portals and broker polls are not always consistent with investing behavior. Mutual Fund Flows capture money flows in and out, but are outflows going to other investments?
Now there is a more accurate measure of true retail behavior from TD Ameritrade(AMTD). The Investor Movement Index (IMX) leverages data from from one of the largest pools of retail investors and traders in the world to create a behavior-based proprietary index which provides insight into Main Street Sentiment. In the video below, I run through a list of stocks that TDAmeritrade has seen its clients rotate in and out of:
The riskier the portfolio exposure, the more intensely bullish OR bearish the portfolio is scored. Taken into consideration are, Margin, Options, Higher Beta Stocks, Leveraged ETFs.
How is it calculated?
Each portfolio is assigned a score. Each portfolio counts as one "vote". The IMX is the median of all the portfolio scores.
The latest April 2013 Investor Movement Index for the five weeks ending April 26, 2013, reveals:
¿ Score: 5.02 (compared to 5.31 in May)
¿ Trend direction: Negative (trend direction shows whether the month-over-month change in score is positive or negative or whether there is no change.)
¿ Trend length: 2 month (number of consecutive months the trend direction has been positive or negative)
¿ Score relative to historic ranges: Moderately High (latest month's score as compared to the historical data range) "Even though there is a slight retracement over the past two months lending to investor skepticism, our clients are rotating among sectors and not going to the sidelines or moving to cash," explains Nicole Sherrod, Managing Director of TDAmeritrade's Trader Group. "TDAmeritrade's retail traders are still on the hunt for attractive dividend and yield plays, as options activity is dominated by covered call and income strategies."
TDAmeritrade is also seeing more participation in options and futures trading each month. "In fact, 40% of TDAmeritrade's 6 million actively traded accounts are derivative based," said Sherrod. "We are pleased to see our retail clients actively trade derivative instruments because it allows them to proactively hedge their portfolios and make money, regardless if we are in a bull or bear market. The playing field is being leveled for the retail investor, allowing them to trade like like the pros because of all of the resources, education and tools available across the company's suite of products."
For more information on the Investor Movement Index, including historical data and full monthly reports, please visit www.tdameritrade.com/IMX