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The company’s Investor Movement Index, a proprietary, behavior-based index, rose 1.76% to 4.63, a moderately small increase compared with historical norms. The index, which traded near 2.1 at the beginning of 2020, reached an all-time high of more than 8 in late 2017.
“The media narrative seems to have been that retail traders are out just buying stocks willy-nilly,” J.J. Kinahan, chief market strategist at online broker TD Ameritrade, told FOX Business. “The primary thing that the data shows is that, yes, our clients have continued to increase their exposure to the market since March, but they're doing so in a very measured fashion.”
The deliberate approach from TD clients came as the benchmark S&P 500 climbed 5.51% during July amid optimism surrounding the reopening of the economy despite a resurgence in new COVID-19 infections. Investor sentiment was also supported by promises the Federal Reserve will keep interest rates near zero for the foreseeable future.
TD investors gravitated towards information technology and health-care companies during the month as the Nasdaq set record high after record high and researchers raced to develop a COVID-19 vaccine.
Favorite stocks included Tesla Inc., Apple Inc., Microsoft Corp., Nikola Corp., Crowdstrike Holdings Inc. and Pfizer Inc.
“The interesting thing to me about Tesla is our clients, when it got down to $500 or $600, were buyers,” Kinahan said. "When it got up to $800 or $900, they were sellers.”
TD clients also took the opportunity to sell some of the names, including Facebook and United Airlines, that had “nice runs” up in March or April, according to Kinahan.
Facebook grappled with advertisers pulling ads after complaints that the social media giant failed to adequately police hate speech, while United faced uncertainty from prospective passengers due to the surge in COVID-19 cases.
Other names on the “net sell” list were Twitter Inc., FedEx Corp., Costco Wholesale Corp. and Roku, Inc.
TD Ameritrade does not provide data about the size of net changes in shares bought or sold.