While investors are getting more bearish, February's stock sell-off didn't drive investors into bonds like during past corrections, with TD Ameritrade clients preferring to move into safer investment options. That's according to JJ Kinahan, chief market strategist at TD Ameritrade Holding Corporation (AMTD), who told CNBC that customers were unloading stocks that were risky and moving to more blue-chip type stocks. "During the sell-off (Feb. 9) clients were buying across the board, and as soon as stocks started to rally they took profits and sold some stocks they bought in 2017," said Kinahan on CNBC. "People don't want to turn to bonds."
Earlier this week, TD Ameritrade reported that its Investor Movement Index (IMX) – a proprietary, behavior-based index created by the company to gauge what investors are actually doing – came in at 5.95. That compares with a level of 7.79 in January, marking a 23% decline from the month earlier, with February characterized by increased volatility that lowered the IMX to levels it hasn't seen since January of last year. If the index increases month over month, that likely means that investors are getting more bullish, according to the firm. A score decrease month over month indicated investors are becoming bearish (or at least less bullish than before)
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Underscoring the shift to more stable stocks, the Omaha, Nebraska-based discount brokerage reported that, among the customers that were buying stocks during February, General Electric Company (GE) and Ford Motor Company (F) were favorites as the stocks neared multi-year lows. Clients also purchased shares of Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), Microsoft Corporation (MSFT), The Boeing Company (BA) and Alibaba Group Holding Limited (BABA) during the month. NVIDIA Corporation (NVDA), Berkshire Hathaway Inc. (BRK.B) and Netflix, Inc. (NFLX) were also popular stocks in February.
Stocks that customers sold off in February included Gilead Sciences, Inc. (GILD), Facebook, Inc. (FB), Bristol-Myers Squibb Company (BMY), Snap Inc. (SNAP) and Target Corporation (TGT), TD Ameritrade said.
"After the amazingly quiet 2017, we saw 2018 start with some volatility," said Kinahan said in a press release announcing the results. "It appears that TD Ameritrade clients decided to significantly limit their volatility risk in the market, changing their game plan from less speculative to more of a low beta weighted one."