Retail traders are net sellers as a turbulent year comes to a close

The Investor Movement Index^® (IMX^SM) decreased to 7.97 in December, down from 8.82 in November. 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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TD Ameritrade December 2021 Investor Movement Index (Graphic: TD Ameritrade)

The reading for the five-week period ending December 31, 2021 ranks “High” compared to historic averages.

According to JJ Kinahan, chief market strategist, TD Ameritrade, “At the close of a year characterized by swings of uncertainty, and many record market highs, we saw clients temper their risk appetite in December, ultimately engaging in strong selling by December’s final week. Whether due to risk moderation or tax plays, our client base was a bit more cautious heading in to 2022.”

Equity markets started the period with uncertainty over the impact rising Covid-19 cases could have over the trajectory of the global economic recovery, and these concerns were amplified as the Omicron variant swept the globe. Inflation anxieties also continued to build as the Consumer Price Index posted a 6.8% annual increase - a pace not seen since the 1980’s. These fears hit some of the more speculative areas of the market, drawing the attention of many market participants. Central bank policy also drew scrutiny as the European Central Bank (ECB) joined the Federal Reserve Bank (FRB) in having to address rising inflation with tighter monetary policy in 2022. The mix of adjustments to asset purchases and rate hikes continues to be the primary driver of uncertainty surrounding central bank policy. With uncertainty mounting and the S&P 500 sitting on a banner year of performance with all sectors up double-digit percentage returns, the period come to a close with net selling of equities.

Although there was strong selling across most sectors of the S&P 500, TD Ameritrade clients did find opportunities to buy certain names during the month. Some of the popular equity names bought in December were:

• Rivian Automotive (RIVN)
• Tesla Inc. (TSLA)
• Ford Motor Company (F)
• Paypal Holdings Inc. (PYPL)
• Walt Disney Company (DIS)

On the sell side, TD Ameritrade clients used elevated prices in some names as profit-taking opportunities. Names sold during the period included:

• Micron Technology, Inc. (MU)
• Taiwan Semiconductor Manufacturing (TSM)
• Moderna Inc. (MRNA)
• Cisco Systems Inc. (CSCO)
• Zoom Video Communications Inc. (ZM)

About the IMX

The IMX value is calculated based on a complex proprietary formula. Each month, TD Ameritrade pulls a sample from its client base of funded accounts, which includes all accounts that completed a trade in the past month. The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly IMX.

For more information on the Investor Movement Index, including historical IMX data going back to January 2010; to view the full report from December 2021, or to sign up for future IMX news alerts, please visit www.tdameritrade.com/IMX. Additionally, TD Ameritrade clients can chart the IMX using the symbol $IMX in either the thinkorswim^® or thinkorswim Mobile platforms.

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold. All investments involve risk including the possible loss of principal. Please consider all risks and objectives before investing.

Past performance of a security, strategy, or index is no guarantee of future results or investment success.

Historical data should not be used alone when making investment decisions. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision.

The IMX is not a tradable index. The IMX should not be used as an indicator or predictor of future client trading volume or financial performance for TD Ameritrade.

About TD Ameritrade

TD Ameritrade provides investing services and education to self-directed investors and registered investment advisors. A leader in U.S. retail trading, we leverage the latest in cutting edge technologies and one-on-one client care to help our clients stay on top of market trends. Learn more by visiting www.amtd.com.

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Source: TD Ameritrade, Inc.

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