TD Ameritade (NASDAQ:AMTD) launched a new trading tool on Tuesday called the Investor Movement Index or IMX. The new index gives us a feel for what the retail investor's current view of the stock market is. According to TD Ameritrade's website, it will be,
Using data from a sample of six million accounts, the IMX gives you a snapshot of investor sentiment. It does this by analyzing the holdings/positions, trading activity, and other data from a sample of the real portfolios held by real retail investors."
The is first index that reveals the behavior of small investors. Before the index was created Mutual Fund outflows were used to track investor sentiment. The index has shown that retail investors take more risks than we previously thought. During the fiscal cliff talks, many retail investors increased their risk levels because they believed that cliff would be resolved in a positive way. TD Ameritrade's competitors do not offer a similar index.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.