Individual investors were on a shopping spree for stock-market bargains in January: E-Trade
Individual investors grew cautiously optimistic in January, with E-Trade clients aggressively buying stocks of companies they saw as having become oversold in December, Chris Larkin senior vice president of trading at E-Trade, told MarketWatch.
“Clients were net buyers [in January], but it wasn’t the strongest month of buying we’ve seen,” he said. “Traders are thinking defensively in the marketplace, but were also looking for bargains after December’s selloff.”
AT&T Inc. T, -0.14% , Facebook Inc.FB, +0.08%and Twitter Inc.TWTR, -0.72%were among the top-selling stocks on the platform in January, Larkin told MarketWatch. The rest of the market concurred with E-Trade investors on Facebook’s and Twitter’s values, which shot up 27.2% and 16.8%, respectively, in January versus the S&P 500 index’sSPX, -0.03%7.9% rise. AT&T shares rose 5.3% on the month.
E-Trade data on sector rotation underscore the cautious optimism retail investors brought to the market last month, as the sectors that saw the most net buying were communications services, information technology and utilities.
“Traders have a lot to like in the newly formed Communication Services sector that blends the old school with the new,” Larkin said. “Those looking for returns tend to flock to dividend plays like AT&T and Verizon Inc.VZ, -0.71%but still seek exposure to high-growth disrupters like Netflix Inc.NFLX, +0.90% , Facebook and [Google parent Alphabet Inc.GOOG, -0.43% ].”
The E-trade numbers corroborate the results of the American Alliance of Individual Investors sentiment survey, released Thursday, which showed individual investors becoming slightly more bullish and much less bearish than they had been at the beginning of the month. Neutral sentiment, meanwhile, rose to its highest level in six months in the week that ended Jan. 30.
According to AAII, 47% of respondents to its survey worry that January’s rally is unsustainable, with just 11% seeing it as the beginning of a sustainable run-up in stock prices.
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