Monthly Summary
The IMX decreased once again in December, declining for the third month in a row, to 4.41 from 5.27, a reduction of 16.32%.
TD Ameritrade clients were net buyers overall, although buying activity lessened as market volatility increased. For the second
month in a row, TD Ameritrade clients were net sellers of equities and net buyers of less volatile securities, including
fixed-income products. Volatility increased during the period, and the Cboe Volatility Index, which measures volatility of the
S&P 500, reached 30 for the first time since February 9. U.S. equity markets headed lower during the period. During the third
week of the period, equity markets posted their worst week since the financial crisis of 2008. The S&P 500 was down 9.9% during
the period, while the Dow Jones Industrial Average was down 9.7%. The Nasdaq Composite also headed lower and was down 10.2%,
entering a bear market during the period, defined as a 20% drop from recent highs. Late in the month, the Dow surged more than
1,000 in one trading session, the largest one-day point gain ever, but it wasn't enough to overcome losses on the index for the
period. Decreases during the month came from anxiety regarding future economic growth and uncertain policy out of Washington.
Mid-month, the Federal Reserve raised short-term interest rates by a quarter-percentage point, but signaled a milder path of rate
increases in the coming year.
Trading
TD Ameritrade clients were once again net sellers of equities during the period, but continued to buy popular names as prices
pulled back. Apple Inc. (NASDAQ: AAPL) was
a net buy as the stock traded lower on demand worries in China. AT&T Inc. (NYSE: T) was net bought as the stock reached a 52-week low during the period, even after
announcing it was the first and only company in the U.S. to offer a 5G mobile device. General Electric Company
(NYSE: GE) was a net buy once again as the stock breached the
$7 mark for the first time since the financial crisis in 2008 - 2009. Altria Group Inc. (NYSE: MO) made an investment in electronic cigarette maker JUUL during the period, and
was also a net buy. Bank stocks Bank of America Corp. (NYSE: BAC) and JP Morgan Chase Inc. (NYSE: JPM) traded lower amid rising fears about economic growth and future loan demand, and
were net bought.Additional popular names bought include Amazon Inc. (NASDAQ: AMZN), Berkshire Hathaway Inc. (NYSE: BRK-B), and BP (NYSE: BP). TD Ameritrade clients were net sellers of social media companies Facebook
Inc. (NASDAQ: FB) and Twitter Inc.
(NYSE: TWTR) during the period. Facebook CEO Mark Zuckerberg
said the company has made strides in improving the identification of fake accounts to prevent election fraud, but the company hit a
52-week low during the period and was net sold. Twitter (NYSE: TWTR) was net sold after receiving analyst downgrades on concerns regarding content
on the site. Alibaba Group Holdings (NYSE: BABA) was also net sold during the period as the stock was swept up in the broad
technology selloff during the period, and traded at a 52-week low. Starbucks Corp. (NASDAQ: SBUX) was net sold as the stock trended lower after it forecast lower
same-store sales growth along with other negative news. Align Technologies Inc. (NASDAQ: ALGN) was net sold after the company traded lower by 50% in the past few months.
Procter & Gamble Co. (NYSE: PG) was one of the
few stocks to hit a 52-week high during the period after receiving an analyst upgrade as one of the few companies trading at a
discount to peers, and was net sold. Additional names sold include TESARO Inc. (NASDAQ: TSRO), Pfizer Inc. (NYSE: PFE), and Duke Energy Corporation (NYSE: DUK). Inclusion of specific security names in this commentary does not constitute a
recommendation from TD Ameritrade to buy, sell, or hold.
Historical Overview
TD Ameritrade's Investor Movement Index (IMX) has generally correlated with the S&P 500 as clients react to equity price
movements, but the index has gone through uncorrelated periods. Beginning in January 2010, when TD Ameritrade started tracking the
IMX, the index rose with equity markets until April 2010, when it peaked at 5.40. In May 2010 investors experienced the "Flash
Crash" and the IMX began a sharp downward trend. The IMX didn't reach 5.00 again until the S&P 500 was well above April 2010
levels. The index eventually peaked at 5.56 in June 2011. This peak was immediately followed by a plunge in equity markets, and in
the IMX, as the media was dominated by the U.S. debt ceiling debate, S&P downgrade of U.S. debt, and European debt concerns.
The S&P 500 began to recover in the fall of 2011, but the IMX continued to decline until it reached a new low at the time in
January 2012. As the S&P 500 began to sustain an upward trend in early 2012, the IMX started to rise. In 2013, as economic
conditions improved and the S&P 500 climbed to record levels, the IMX rose to the high end of its historical range, finishing
2013 at 5.62, and continued to rise in 2014 amid geopolitical tensions related to Ukraine and the Middle East, until seeing slight
declines in October and November. By the middle of 2015 the IMX had seen increases, as equity market volatility had reduced to near
historical levels while the market continued its upward trend. As 2015 ended its third quarter, volatility had returned to markets,
as global economic concerns and speculation around the timing and trajectory of Federal Reserve rate increases seemed to rattle
overall equity markets. This uncertainty continued to play a role in the equity markets through the fourth quarter of 2015 and into
early 2016. The volatility accompanying this uncertainty abated in the second quarter of 2016 and remained low until late in the
third quarter. Just as it had in 2015, the IMX saw increases mid-year during the period of lower volatility. The IMX continued to
climb into the fourth quarter reaching 5.83 in October 2016, its highest point in two years. A brief spike in volatility during
November, timed around the U.S. presidential election, coincided with a slight pull back in the IMX, which then ended 2016 at the
high end of its historical range. The IMX started 2017 with an upward trend and reaching an all-time high in March, before pausing
in April as lower volatility lead to a decrease in the IMX. The momentum resumed in May, with the IMX breaching 7.0 for the first
time ever in July of 2017. The IMX took another brief pause in September, before following markets higher and breaching 8.0 for the
first time ever in November and ending 2017 at an all-time high. Volatility returned to the markets in early 2018, and the IMX
decreased for four consecutive months to start the year. The IMX then rebound in the spring of 2018, and continued higher during
the summer on the back of better-than-expected earnings and increasing equity markets.
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