TD Ameritrade Holding's AMTD +1.15% monthly look at its retail clients’ trading activity shows real world investors were bullish in November as equities again hit record highs. Unlike in October, November trading was broad based, suggesting overall confidence in the market.
The firm’s investor movement index rose to 5.42 in November, the second highest reading in the index’s four year history and up from 5.07 in October. “There is more conviction behind the bullishness of our client base as the markets have pushed to higher highs in November,” said Nicole Sherrod, managing director of TD Ameritrade’s trader group.
In October retail investor buying was concentrated to a few big names with active traders driving the movement and favoring stocks like Facebook,Netflix NFLX +0.36% and JC Penney JCP +4.33%. In a reversal, this month long term investors came out of the woodwork adding to positions in domestic equity mutual funds and broad based ETFs after months of outflows. Favorites included SPDR S&P 500 which tracks the S&P 500 index and the Meridian Global Legacy mutual fund.
On the individual stock side clients bought up shares of momentum stocks like Tesla Motors TSLA +3.09%, Salesforce.com CRM -0.37%, Cisco Systems CSCO -0.22% and for the second month in a row JC Penney. Despite overall market stability, the big movers had relatively volatile months and investors tried to get in at the lows. “Our clients are always looking for potential buying opportunities and we have consistently seen our clients purchase names on price dips,” said Sherrod.
Twitter was also popular in its first month of trading with investors steadily adding to positions over the month. On the other hand, Facebook holders began taking profits after making it the most bought stock in October. The most sold stock, however, wasApple AAPL +1.18%. After the perennial favorite hit a 10 month high in October, Apple was range bound in November and retail investors began getting out. Other big sellers included Pfizer PFE +0.13% which hit its 52-week high and Microsoft MSFT +0.9% which achieved its highest price since the dot com boom.
“In some months it’s a really interesting story with respect to what [retail investors] are trading,” says Sherrod. This month didn’t have big surprises in stock or sector picks but as the market pushed higher there is still a high rate of activity and exposure.
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