Retail Investors Most Bearish in 7 Months on new taper fears

Retail investors took profits in July on fears about the Federal Reserve’s exit plan from its monster monetary stimulus, with the group showing the lowest sentiment reading since January, according to data culled from the largest pool of retail traders by TD Ameritrade.

The firm’s proprietary “Investor Movement Index” released Monday showed a 4.87 reading, down from a bullish 5.15 reading in June. They were net sellers of equities last month, especially in shares of 2013 highfliers like Hewlett Packard, Cisco and Time Warner Cable.

“I think its taper fears,” said Steve Quirk, senior vice president of TD Ameritrade’s Trader Group. “The investing public is not stupid. They know it’s coming and this is probably a point that if you’ve seen appreciable gains, you should start to take them off the table.”

The S&P 500 jumped to a record high last week as a solid, but a not super jobs report gave professional investors the impression that the Fed could hold off from dialing back bond buying (QE3) in September/October. Or at the very least, according to their thinking, the economy is now strong enough to handle it.

CNBC

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