Retail investors piled into momentum stocks: TD Ameritrade

Retail investors piled into momentum stocks in October, with names such as Facebook, Netflix and Tesla topping their buy lists, according to data culled from the largest pool of retail traders by TD Ameritrade.

"For three consecutive months, we've had net selling in the financial names, and I think a lot of that has been shifting over to some more of the momentum plays," said Nicole Sherrod, TD Ameritrade managing director.

On CNBC's "Halftime Report," she said the company's proprietary "Investor Movement Index" had previously shown a correlation between a bull market and customers' behavior. The IMX turned positive, to a 5.07, for last month.

"What I've observed from the launch of the index is the fact that the retail investors, as the market pushes to higher highs, they tend to take some profits off the table, and they're net sellers," she said.

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But in October, she added, individual investors took a different tack and were net buyers.

"They dialed up their equity exposure," she said. "But the focus was concentrated not across the broad market but more in those individual momentum names, like Netflix and Tesla."

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Sherrod said the No. 1 stock investors were buying was Facebook, suggesting that sentiment was positive for the social media company's prospects.

"You look at Facebook compared to Google, both Facebook and Google both had great earnings," she said. "They were net sellers in Google, but they stayed in the Facebook position, as if to indicate that they think that there's more upside there."

Rounding out the most-traded stocks for October were IBM and J.C. Penney, which Sherrod said was "more of a trader play."

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Among the top most-sold stocks were Bank of America, Citigroup, General Electric, Alcoa, Google and Home Depot.

"I think it's safe to say there was some profit-taking," Sherrod said. "GE was at a 52-week high. Alcoa also hit a 52-week high. That's a continuation of themes we've seen before."

(Read more: Retail investors most bearish in 7 months: Survey)

Sherrod also said investor activity didn't signal a bullish broader market, noting that October trading was "very concentrated in momentum names."

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.