TD Ameritrade Investor Movement Index Drops for Third Month in Row

April 10, 2018 — 11:38 AM EDT

TD Ameritrade's Investor Movement Index dropped 12% in March, hitting its lowest point in close to two years as the stock market remains volatile, with fears over a trade war ebbing and flowing based on the President's tweets.

According to the Omaha, Nebraska-based online brokerage, its Investor Movement Index (IMX) -- a proprietary, behavior-based index created by the company to gauge what investors are actually doing -- came in at 5.22, lower than the 5.95 reading in February and down for the third month in a row. TD Ameritrade Holding Corporation (AMTD) noted that clients displayed optimism about the economy during March and were net buyers of equities nevertheless.

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"March's market sell-off continued with news of a potential trade war between the U.S. and China, followed by a data breach involving Facebook that impacted millions of users," said JJ Kinahan, chief market strategist at TD Ameritrade, in a press release announcing results of the March index. "Clients navigated the markets by dialing back exposure and rotating out of popular stocks – such as Facebook – which has been a primary holding for many clients including millennials."

During the month, which also included news of a new Facebook data scandal in which it revealed that data from 87 million users may have been accessed by political consulting firm Cambridge Analytica without their consent, TD Ameritrade customers were net buyers of Amazon.com, Inc. (AMZN) and Netflix, Inc. (NFLX). Amazon has also been in the news in recent days, with President Trump ratcheting up his attack on the company's business model. TD Ameritrade clients also purchased shares of General Electric Company (GE) and Exxon Mobil Corporation (XOM). In the case of Amazon, GE and Netflix, customers appeared to be taking advantage of the recent sells-offs in the stocks. After all, during March, GE's stock hit $13 per share for the first time since 2009, noted TD Ameritrade. Clients also purchased shares of Intel Corporation (INTC) and The Boeing Company (BA) during March.

As for what stocks its customers were selling, the online brokerage pointed to Facebook, Inc. (FB), Parker-Hannifin Corporation (PH), WYNN Resorts, Limited (WYNN) and Western Digital Corporation (WDC). The brokerage warned that worries about tariffs will continue to drive volatility in the markets and that investors should prepare for that during April. "Based on geopolitical statements, there is no reason to believe that volatility will significantly stop throughout the next month given the time frames on tariffs," said Kinahan. "We will most likely not see any certainty out of what will actually be implemented until well after April."