Are Average Investors Getting Back Into the Market?

March marks the third year of the bull market, but it's been well known that individual investors have largely stayed on the sidelines. This has led to some concerns by analysts who speculate that a fast and furious recovery will leave Main Street investors behind while Wall Street investors get rich(er).

Is it time for Main Street to dip their feet back into the market? According to Charles Schwab, the time is ripe for this group to get active again.

Charles Schwab has noted its most active clients have displayed their highest level of bullish sentiment since the bull market began. "The jump in optimism from this group may signal the less active crowd will soon follow, propelling the rally to a fourth year, market analysts said." (Via Fast Money.) The Charles Schwab Active Trader Sentiment Survey showed 51% of individual investors that trade frequently are now bullish.

"I think it means we will finally see retail buying," said Mary Ann Bartels, head of technical and market analysis at Bank of America Merrill Lynch to CNBC. "They have been absent from the market." 

Business section: Investing ideas
More investors mean higher trading volumes, something that has been noticeably absent from the 2012 market rally. And many believe without that volume, the rally will not continue.

But we were wondering -- which companies are proving to be exceptions to the low-volume rally?

We screened a universe of stocks with market caps above $300 million for relative volume above 1.25 (relative volume is the ratio between current volume and the three-month average) and an average volume above 100,000.

We then screened for two opposing sentiments: Net institutional buying (bullish Wall Street plays) in the current quarter, and increased short positions by short sellers (a negative short-term play). Which investor group do you think is making the right move?

List sorted by relative volume. (Click here to access free, interactive tools to analyze these ideas.)

1. KIT digital (Nasdaq: KITD  ) : Provides cloud-based video management solutions for multi-screen delivery worldwide. Average volume at 863,760, current volume at 10,373,812, relative volume 14.78. Net institutional purchases in the current quarter numbered 4 million shares, which represents about 9.75% of the company's float of 41.04 million shares. Shares shorted have increased from 20.06 million to 21.13 million over the last month, an increase which represents about 2.61% of the company's float of 41.04 million shares.

2. Weight Watchers International (NYSE: WTW  ) : Provides weight management services worldwide. Average volume at 1.58 million, current volume at 2,370,827, relative volume 1.87. Net institutional purchases in the current quarter numbered 1.7 million shares, which represents about 4.84% of the company's float of 35.14 million shares. Shares shorted have increased from 6.84 million to 7.77 million over the last month, an increase which represents about 2.65% of the company's float of 35.14 million shares.

3. D. R. Horton (NYSE: DHI  ) : Operates as a homebuilding company in the United States. Average volume at 7.49 million, current volume at 10,210,960, relative volume 1.68. Net institutional purchases in the current quarter numbered 12 million shares, which represents about 4.34% of the company's float of 276.53 million shares. Shares shorted have increased from 25.39 million to 28.67 million over the last month, an increase which represents about 1.19% of the company's float of 276.53 million shares.

4. Qihoo 360 Technology (Nasdaq: QIHU  ) : Provides Internet and mobile security products in the China. Average volume at 1.54 million, current volume at 1,953,088, relative volume 1.56. Net institutional purchases in the current quarter numbered 18 million shares, which represents about 51.96% of the company's float of 34.64 million shares. Shares shorted have increased from 10.06 million to 10.93 million over the last month, an increase which represents about 2.51% of the company's float of 34.64 million shares.

5. Verint Systems (Nasdaq: VRNT  ) : Provides actionable intelligence solutions and value-added services worldwide. Average volume at 177,910, current volume at 196,127, relative volume 1.37. Net institutional purchases in the current quarter at 1.1 million shares, which represents about 5.59% of the company's float of 19.68 million shares. Shares shorted have increased from 1.02 million to 1.23 million over the last month, an increase which represents about 1.07% of the company's float of 19.68 million shares.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


 

Kapitall's Rebecca Lipman does not own any of the shares mentioned above. The Motley Fool owns shares of Bank of America. Motley Fool newsletter services have recommended buying shares of Charles Schwab. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1844466, ~/Articles/ArticleHandler.aspx, 10/25/2014 9:17:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement