NEW YORK (TheStreet) - As volatility came rushing back into the stock market this October, TD Ameritrade's Investor Movement Index fell to 5.22, from 5.79 in September. According to chief strategist J.J. Kinahan, it's important to remember that the Investor Movement Index measures retail investors' engagement in the stock market, not necessarily whether they are buying and selling.
Kinahan explained that investors rotated out of higher volatility stocks and into lower volatility stocks. They also found solace in names like Ford (F) and AT&T (T) , which offer attractive dividend yields of 3.5% and 5.3%, respectively.
With the 10-year Treasury yield around 2.36%, the chase for yield is becoming evident, particularly in the oil sector, he said. Investors flocked to stocks like Transocean (RIG) and BP (BP) , which pay dividend yields of 10.1% and 5.7%, respectively.
But investors need to be careful chasing these types of stocks. Generally, higher yields pose higher risks. With yield being so hard to come by, investors are willing to take on additional risk in order to generate income, Kinahan explained.
The latest October jobs report showed that many Americans are finding work in the food services area. Retail sales data will be released this Friday. If that number comes back strong, Kinahan says, then the demand for hiring in the retail space is warranted.
However, if the retail sales results come in weaker-than-expected, then it means that the October labor report really isn't that good after all, he concluded.
-- Written by Bret Kenwell