Investors were moderate net buyers of stocks in July, according to Charles Schwab trading data. And while they continued to pile into favorites such as Nvidia, Schwab traders may be feeling pretty smug for selling Tesla before the August sell-off.
Schwab clients unloaded Tesla stock, Palo Alto Networks and Dow Jones component Boeing during a four-week period ending July 26. Those who sold Tesla stock showed good timing by dumping the stock before Tesla began a three-day rout this month.
Tesla stock was up about 17% in July. But Schwab investors dodged a bullet: They avoided a 9.5% drop since July 26. The stock fell below its 50- and 200-day lines Friday. Monday's drop triggered sell signals. Tesla closed the day down 4.2% but trimmed losses.
The trading data comes from the latest Schwab Trading Activity Index, which analyzes Schwab's retail investor stock positions and trading activity from millions of client accounts. The index for the four-week period rose to 54.81 from 54.71 in June.
"On a sector basis, clients bought most in information technology and consumer discretionary, while selling was most pronounced in financials, health care, and industrials," said Joe Mazzola, Head Trading and Derivatives Strategist at Charles Schwab.
Stocks have deteriorated quickly since the report. The Nasdaq composite lost around 6.6% while the S&P 500 dropped 5% since July 26.
Nvidia Stock, Tesla Stock Disappoint Investors
Investors who bought Nvidia — a member of IBD 50 and Leaderboard — in July may be feeling some buyer's remorse as the stock fell below its 50-day moving average on July 24. Nvidia stock had a volatile ride into the end of July and has fallen around 14.1% in the first three sessions of August. The Magnificent Seven stock pulled back to its 97.40 buy point, which is a round-trip sell signal.
Google parent Alphabet was also a big addition for Schwab clients, but like Tesla stock, Alphabet stock has struggled since mid-July. The stock hit a new high on July 10 before starting to falter the following day. Google stock also plunged below its 50-day line on July 24.
Besides Nvidia, Schwab clients also increased exposure to Broadcom, which acted similarly to Google and Nvidia stocks. Broadcom stock is 9% below its 50-day line.
Chipotle Mexican Grill gained around 4.7% since July 26, but shares fell back below their 200-day moving average Friday.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
