The Investor Movement Index increased to 4.35 in May, up 11.54 percent from its April score of 3.90. 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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“In May, we started to see optimism really take hold of the markets”
The reading for the five-week period ending May 29, 2020, ranks “Low” compared to historic averages.
“In May, we started to see optimism really take hold of the markets,” said JJ Kinahan, chief market strategist at TD Ameritrade. “Clients were future-focused in their equity buys, as we saw the ‘optimism trade’ take hold in terms of the actual or soon-to-be reopening of state economies, feeding hope of a quick recovery. Combine this with news around potential coronavirus vaccine developments, along with a slowing of cases and our clients used this news to step up their exposure to the market.”
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TD Ameritrade clients increased exposure to equity markets for the first time in four months during the May period as equity markets moved higher, with the S&P 500 recapturing the 3,000 mark for the first time since early March. The S&P 500 increased 7.3 percent, while the Dow Jones Industrial Average increased 6.8 percent. Technology stocks were in favor, and the Nasdaq Composite increased 9.9 percent. U.S. consumer spending fell by a record 13.6 percent during April due to COVID-19 pandemic lockdowns – in fact, retail sales were down a record 14.6 percent due to a dramatic decrease in shopping and dining out. Many were heartened by the news that U.S. companies Moderna Inc. and Pfizer Inc. announced positive testing results for a coronavirus vaccine, while the Chinese company Sinovac Biotech announced it reached stage 2 of its clinical trial.
TD Ameritrade clients were net buyers overall during the May period, and net buyers of equities. Clients preferred equities, with large buying in the health care, industrial, and energy sectors. On the other hand, they were less interested in fixed income, with the lightest buying activity seen in two years. Intraday volatility was generally lighter during the period with the Cboe Volatility Index, or VIX, which measures volatility of the S&P 500 Index, closing below 30 for the first time since February.
