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Most bought and sold stocks of May, strategist explains

As bullish sentiment rose in the month of May, Nvidia became one of the most sold stocks by investors as the chipmaker crossed a $1 trillion market value milestone. TD Ameritrade Trading Strategist Alex Coffey joins Yahoo Finance Live to look at the most bought and sold stocks that month.

Video transcript

BRAD SMITH: The old, old stock market adage is sell in May and go away. That's what the old adage is. But investors didn't live up to that this year according to TD ameritrade's May investor movement index, which rose about 8% from April.

Joining us now with what investors bought and sold last month, we've got Alex Coffey who is the TD Ameritrade trading strategist here. Alex, great to have you here with us this morning. All right, so where did we see the most inflows and outflows during the month of May?

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Yeah, first off, thanks for having me. As you mentioned, you do see investor sentiment up taking about by about 8% to 5.12 for the overall TD Ameritrade client population, but notably, broke a streak of three straight months of net equity buying. We actually saw TD Ameritrade clients as net sellers of equities.

And so sometimes we'll see that divergence where you'll see the investor sentiment actually increase, but overall, there was net selling when it comes to stocks and the trading involved there. This can be due to increased appetite for things like fixed income, or it can just be the mix of the stocks that were bought being a little bit further out on the risk spectrum. What really stuck out to me though for this particular month was how contrarian the buys and sells on an individual name basis really seemed to be.

JULIE HYMAN: Yeah, on the sell, particularly on the sell side, Alex, Nvidia being sold, Advanced Micro devices, DraftKings, which has more than doubled this year. What gives? Were people just trying to take some profits here?

ALEX COFFEY: I think it has to be seen that way. I went back and looked at an Nvidia in particular. This is one of the most heavily bought names for much of last summer and fall. Of course, when much of the market, particularly the tech side of the market was struggling, there was a contrarian kind of trying to catch the falling knife, if you will last summer. And many of these names and kind of steadily throughout their recovery of which Nvidia I think, is beyond that now, of course, with a new all time high, crossing that trillion mark last week.

This has been a staple amongst the sells for the better part of the last four or five months. Really coming to I think a bit of a crescendo with the full recovery post that blowout earnings quarter. That revenue guidance was jaw dropping in many ways. And I think many investors who have been involved in these names see this as an opportunity. I mean, a lot of the macro picture while still murky, I think has been kind of teetering between optimistic and cautious. And I think investors are just using this, as you said, as an opportunity to take some risk off the table and some of these names that have been really, really strong performers.

It's not just Nvidia. It's of course AMD as well, names like Apple, Microsoft, Meta. I really looked at it. Really all of let's say the top 10 or so names all of them but American Airlines on the sell side had really, really strong months and have really been strong for two or three months in a row.

BRAD SMITH: All right, we'll see if there's a diminuendo on the other side of that top end of the crescendo that you mentioned a moment ago. I think for right now in a lot of the strength as well, you were mentioning travel a second ago. Is there a more concerted mindshare or attention that you've been seeing among traders or retail investors around some of the travel names right now?

ALEX COFFEY: A little bit. It's still targeted though. So they were net buyers of Disney, for example, but they were net sellers of American Airlines. They were net Sellers of Uber, which I think is tangentially kind of associated with that kind of activity. Although, an argument could be made that Uber might be more of an AI sympathy play as well in sort of that tech high beta aspect.

But I think in general, the threads that you can see in terms of where some of the buys were, Tesla, for example, really didn't have a strong few months leading into May and made of course, a pretty impressive comeback the last few weeks. But it was down at like 160-170 at the beginning of the month. And so again, it seems to just be opportunistic buying and then deleveraging, taking risk off in names that have done really well.

So trying to compare names like PayPal and Verizon and Bank of America, which we see on the buys alongside it. Of course, names like Ford and Tesla and Nphase, the only real key thread between them was underperformance either during the period post earnings or underperformance leading into May.

BRAD SMITH: Alex Coffey who is the TD Ameritrade trading strategist Thanks so much for joining us here this morning with the breakdown of where some of those portfolio movements have taken place. Appreciate it.