November IMX is down
Investor Movement Index® (IMXSM): November 2023 5.2 -0.44 (-7.80%)
Monthly summary
imx.tdameritrade.com
Investment exposure in TD Ameritrade client accounts moved lower during the four-week period ending November 24, 2023, with an IMX score of 5.20. This continues to rank “moderately low” compared to historical averages.
TD Ameritrade clients were net sellers of equities in the November IMX period. Selling was most pronounced within the Information Technology, Communication Services, and Consumer Discretionary sectors, while buying interest was strongest in Health Care, Consumer Staples, and Energy.
Falling bond yields, slower job growth, and higher unemployment paved the way for U.S. equity markets to soar during the November IMX period. The U.S. Bureau of Labor Statistics released the Employment Situation Summary on November 3, which reflected that the unemployment rate ticked higher from 3.8% to 3.9% and that nonfarm payrolls rose by 150,000 in October, slightly less than expected. The Federal Reserve’s Federal Open Market Committee (FOMC) voted to leave rates unchanged on November 8, and Fed Chair Jerome Powell’s subsequent press conference was perceived as dovish, spurring an equity rally. On November 14, it was reported that the Consumer Price Index (CPI) rose by 3.2% year-over-year in October, down from 3.7% in September, and below the Street’s expectations of 3.3%. U.S. equity markets rallied strongly in response to this cooler-than-expected inflation data, viewing it as further evidence the U.S. Federal Reserve may be done tightening monetary policy.
During the November IMX period the S&P 500 (SPX) surged almost 11% to close at 4559.34. The CBOE Volatility Index (VIX) collapsed to its lowest level since before the pandemic, ending the period at 12.46. The U.S. Dollar Index edged lower to close at 103.415. January Crude Oil Futures traded 9% lower, against a backdrop of weaker-than-expected demand, settling at $75.54 per barrel to end the period.
Trading
While overall, TD Ameritrade clients were net sellers of equities during the November IMX period, they did find some individual companies to increase exposure to. TD Ameritrade clients were net buyers of the real estate investment trust ( REIT) Realty Income Corp. ( O), as well as vehicle manufacturers Tesla ( TSLA), and Ford Motor Co ( F). On November 6, Realty Income Corp. reported better-than-expected earnings and the stock bounced sharply off multi-year lows. On October 18, Tesla reported disappointing earnings and the stock traded lower for the remainder of the October period. Buyers were rewarded quickly, however, as shares bottomed in late October and traded as high as $246.70 during the November IMX period. Shares of Ford Motor Co ( F) have struggled for the past six months amid a backdrop of a United Auto Workers ( UAW) strike and weaker-than-expected demand for its electric vehicles ( EV). The stock sold off further following an October 26 earnings miss. TD Ameritrade clients bought the weakness and saw the stock trade higher by as much as 10% during the November IMX period, as the company detailed several cost-cutting measures.
Additional popular names bought include Alphabet ( GOOG)/( GOOGL), Chevron ( CVX), Pfizer ( PFE), Altria Group ( MO), and SoFi ( SOFI).
At the same time, TD Ameritrade clients found several companies to reduce exposure to during November. Clients sold shares of Walt Disney ( DIS) as the stock price rebounded in November. Disney had several box office disappointments in November; however, the strong performance of its theme parks and better-than-expected metrics for Disney Plus, its streaming service, were reported during the company’s October earnings call. This continued to support the stock price throughout the November IMX period. TD Ameritrade clients also sold into strength in Netflix ( NFLX) as the stock gapped up as much as 20% following a report the prior month that earnings beat expectations. The company’s global reach and investments in machine learning that curate unique customer experiences continue to impress analysts and investors. TD Ameritrade clients used a sharp rally in Amazon ( AMZN) as an opportunity to lock-in some nice profits. Amazon reported an earnings blowout in late October, and shares have been on the rise ever since.
Additional names sold include Apple ( AAPL), Advanced Micro Devices ( AMD), Palantir ( PLTR), Intel ( INTC), and Verizon ( VZ).
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 March 2010, when TD Ameritrade started tracking the IMX, the index rose with equity markets until June 2010, when it peaked at 5.40. In June 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 June 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 March 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 March. 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 March, 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 June, before pausing in June as lower volatility led to a decrease in the IMX. The momentum resumed in June, 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 March 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 rebounded in the spring of 2018 and continued higher during the summer on the back of better-than-expected earnings and increasing equity markets. The IMX headed higher during the fall of 2018 as economic growth increased before heading lower in late 2018 as the Nasdaq Composite entered a bear market to end the year. Geopolitical issues were in the headlines during early 2019 as the U.S. and China traded tariffs. The IMX rebounded along with equity markets in the spring of 2019 on optimism of a trade deal with China and the unemployment rate nearing a 49-year low. The IMX remained range-bound during the summer of 2019 as trade-related policy concerns led to investors favoring less-risky assets, including fixed-income products. Heading into the fall of 2019, the IMX began to rebound and ended the year at the highest levels in over a year as trade war fears diminished and economic data began to improve globally. In early 2020, the bull market ended as markets pulled back due to the COVID-19 pandemic, with markets experiencing volatility not seen since the financial crisis of 2008. During the spring of 2020, the IMX reached 3.90, its lowest point in years after equity markets sold off on pandemic fears. The IMX began to rebound into the summer of 2020 as equity markets began to rebound after a slight uptick in economic activity. Market volatility continued into the fall of 2020 before markets headed higher, reaching all-time highs. TD Ameritrade clients increased equity market exposure to the highest level in nearly three years to end 2020. The upward trend continued into 2021 along with equity markets, and the IMX increased above 8.0 for the first time since 2017. |
