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Recently, the blogosphere was full of stories of how individual investors have been pouring money into equity mutual funds and interpreting this as either bullish (momentum) or bearish (retail money = dumb money). But have they really been buying stocks hand over fist?

The TD-Ameritrade Investor Movement Index (IMX) is a relatively new index that measures the change in net equity exposure of TD-Ameritrade customers. Surprisingly, their net exposure fell in January, despite being net buyers of equities:

Clients were net buyers of equities in January, but their investments held and adjusted portfolio compositions (net of trading activity) were less volatile relative to the S&P 500 than in previous periods. This lowered clients' overall exposure to the equity market and drove the IMX down last month.

(click to enlarge)

I have been relatively cautious on stocks lately, largely because of excessive bullishness indicating crowded, long, overbought technical readings (see my recent articles "Too Far, Too Fast" and "More Overbought Warnings From BoAML") and insider selling (see "Insider Selling, It's Baaack!"). I do not base my conclusions on retail investor activity.

Nevertheless, I am always looking for either data or commentary that shows the other side of the story. The IMX is one indicator that is definitely worth watching.

Disclaimer: Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. ("Qwest"). This article is prepared by Mr. Hui as an outside business activity. As such, Qwest does not review or approve materials presented herein. The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest. None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions. Past performance is not indicative of future results. Either Qwest or Mr. Hui may hold or control long or short positions in the securities or instruments mentioned.

Source: Have Mom And Pop Really Been Buying Stocks?