TD Ameritrade Chief Market Strategist JJ Kinahan joins Yahoo Finance Live to discuss volatility, stock market trends, and the outlook for investors amid the Russia-Ukraine war.

Video Transcript

AKIKO FUJITA: Let's bring in JJ Kinahan. He's TD Ameritrade chief market strategist. JJ, this is kind of a perfect segue way to you because you've always got a good pulse on where retail traders are moving. Energy was already a popular sector, even before everything erupted between Russia and Ukraine. How have you seen portfolios shift up as we've seen those energy prices soar?

JJ KINAHAN: Yeah, well, certainly, you know, as you said, if you go back four or five months ago, stocks like to ExxonMobil and Chevron were popular for actually a different reason, and that being they had very attractive yields. And there were some attractive yields in the energy space overall. So when we were a little more unsure of what was going to happen with rates, we saw many investors going in there when these were at lower prices, as you said, for a little bit different reason, and they became the beneficiaries, if you will, of this oil move overall, as the stock started to head a little bit higher.

Now, of course, there are going to be some clients, as you guys just talked about, who do those smaller stocks. You know, you just hope that those are the parts of people's portfolios where it's like, OK, I'm going to take a small amount of my portfolio and take a shot, if you will or whatever. Because you can't make some money there.

There's a little bit more risk when you start trading stocks that are under $10 in terms of how quick they move. And, you know, they move up and can move down pretty quickly also. But obviously, there is a lot of interest because of the pure dollar amount you have to put forward for a stock, like, that's trading $8 or $9 compared to an ExxonMobil or Chevron, et cetera. So I do understand why people are attracted to those.

JARED BLIKRE: And JJ, I just want to get your big picture view of the market right now. S&P 500 is having its second best day of the year. Now we've seen these fits and starts before, and we are in a market with heightened volatility. I'm just wondering, do you think this is the beginning of a rally? And I've heard a growing chorus on Wall Street getting, I would say, a little bit more bullish than they had been. Or do you think this is just a sucker's rally, maybe a dead cat bounce?

JJ KINAHAN: Well, Jared, you know, again, as you said, I think there are more analysts who are getting a little bit more bullish. But I would warn people one thing. And that is we're still seeing the VIX over 30. When you do, that's usually a warning sign, more volatility to come. And the reason I want to call that out-- I don't want to throw cold water on the rally, so to speak, but these are not the types of things that end very quickly.

And the fact is if you think about the volatility spikes we've had over the last couple of years, it's been a two-day, three-day, maybe even a one-week occasion, and then they kind of end. It's almost like you see how they can end. In the situation that we face right now in the Ukraine, yes, it could end quickly. But I don't think that anybody is saying, OK, we see a definite end. Here's kind of the time frame I'm looking for that. This is a very fluid situation, which could end quickly. It could continue to go on.

With that said, I think you also have to keep in mind that the ramifications of these slowdowns, et cetera, are not going to end. If this were to end this afternoon, I still think we're going to see a lot of ramifications to prices, et cetera. One of the stories that is in this report that I read a lot about over the weekend is the fact that if you look at a lot of the ship captains and ship crews, the Ukraine population is kind of overrepresented in terms of folks who do that.

Well, what does that mean overall? That means we could continue to see a slowdown in goods being shipped, et cetera, which keeps prices higher. So I do think that as investors, that's what you have to keep in mind, that the volatility may not end very, very quickly. It could stay a little bit more. Not to say you shouldn't be investing and, you know, days like today are awesome, but you have to keep that in mind, and particularly maybe thinking about dollar cost averaging if we do sell back off, et cetera.

AKIKO FUJITA: And JJ, looking at your investor movement index for the month of February, we were just talking about oil, but you've got that, you know, when you look at your clients, they were actually net sellers of names like Exxon Mobil. But you're back to buying the tech names again with NVIDIA, Microsoft, Apple, AMD. I mean, is this just about the pullback that we have seen and the opportunity that comes with it? Or is there you think something else that's taking shape here, where maybe some clients are feeling a little safer back in the tech names?

JJ KINAHAN: Well, I think a couple of things about it. First of all, for the third month in a row-- and you guys have been nice enough to have me on to talk about it-- we've seen our clients take less exposure to the market. Starting in December, every month since then, our clients have taken less and less exposure to the market overall. And usually, in times of trouble, the pattern we've seen over the last 18 months or so is Apple and Microsoft are the two stocks people go to first in times of trouble. So it was not necessarily a big surprise to see that being the starting point.

NVIDIA is a name that our clients have liked over the last year. To see that and AMD, I think a little bit maybe of a surprise. And, you know, Intel was also a stock our clients liked last month. And I think part of it is maybe people see a little bit of a chip shortage. So with that, those stocks, because of opportunity, can rise because their margin's going higher. So that's, I think, pretty interesting overall and, you know, a trend we're going to keep our eyes on as those stocks continue to be fairly popular.

And then Pfizer, you know, I look around, and I'm trying to find a lot of reasons people-- not to say Pfizer is a bad stock, but this has been one that for the last year through, you know, COVID, et cetera, our clients have liked. Very interesting to me that it even as we saw the Omicron variant go away, Pfizer continues to be a stock that our clients want longer term.

On the sell side, I think you hit it right on the head. ExxonMobil, with the rally in crude oil-- as I said, you've got to keep in mind many of our clients bought this stock six months ago, et cetera. They bought it for a dividend. They're getting the oil pop. And so as oil started to continue higher, I think many of our clients is taking advantage of it and saying, OK, with rate hike on the horizon, with the fact that Exxon has gone a little bit higher, it gives a little bit of opportunity for us.

The one name I thought was really interesting on the report in terms of a sale was Carnival Cruise Lines. The reason I call that one out, it was primarily driven by our millennial clients being sellers of that name. So, you know, those are the clients who started to buy this stock when the COVID started. So interesting that as we start to come out of COVID much more around the country, they're the first ones to sell it, so a name that's worth watching going forward.

JARED BLIKRE: Yeah, pretty interesting. Retail might be leading institutional for once. JJ, always great to talk with you and look forward to having you back in the month of April. JJ Kinahan, TD Ameritrade chief market strategist.