Trader sentiment turns bearish for Q2 2022, Charles Schwab survey says
shapecharge/iStock via Getty Images

More than half of traders surveyed by Charles Schwab (NYSE:SCHW) are expecting a significant correction in Q2 2022 and fewer than a third think the stock market will perform well.
"Overall, in the second quarter, market sentiment among traders is unquestionably skewing bearish," said Barry Metzger, head of Trading and Education at Schwab (SCHW).
Inflation tops the list of traders' concerns. Most (68%) expect inflation to ease before 2024, while 32% expect it to subside in 2024 or later.
Real estate was the number one hedge against inflation, followed by gold (32%), followed by gold (20%), and cryptocurrencies or related products (18%). Still 44% of the traders surveyed didn't hedge against inflation.
More than half of traders anticipated a "Russian Baer" by the end of 2022, meaning the major stock averages (Dow, S&P, Nasdaq) will finish the year in bear territory largely because of the conflict. Of those expecting a Russia-induced bear market, 60% expect a medium drop of 10%-20%. The next largest group (23%) expect a 1%-10% drop. The rest see a stock market decline of more than 20%.
For hedging against geopolitical risk, 28% of respondents moved assets to cash, 15% bought gold, 11% bought crypto, and 8% moved out of emerging markets. 48% didn't hedge against geopolitical risks.
"Although the sentiment was more bearish, they see investment opportunities," Metzger said. They're most bullish on Energy (70%), Utilities (54%), Materials (51%), and Health Care (51%). And the traders are most bearish on Consumer Discretionary (51%), Real Estate (50%), IT (40%), and Finance (36%).
At the thematic level, they see opportunities in Cyber Security (71%), Defense Contracting (70%), Agriculture (57%), Artificial Intelligence (56%) and Renewable Energy (55%). They're most bearish on Automated Cars (28%), The Space Economy (26%), Online Gaming (24%) and ESG (22%).
The bearish sentiment also showed in the TD Ameritrade Investor Movement Index ("IMX"), which fell to 6.33 in April from 6.42 in March. The reading for the five-week period ended April 29, 2022 ranked "Moderate" compared with historic averages, the company said. 
"Ultimately, TD Ameritrade clients were net buyers in April despite a slightly decreased appetite for market exposure generally and light selling in the Consumer Staples, Materials, Health Care and Utilities sectors," said Shawn Cruz, head trading strategist at Schwab's (SCHW) TD Ameritrade.
Some of the popular equity names bought in April were Amazon (AMZN), Alphabet (GOOG), NVIDIA (NVDA), Twitter (TWTR), and Ford (F). Names sold during the month were Chevron (CVX), Nucor (NUE), United States Steel (X), General Electric (GE), and American Airlines (AAL).
TD Ameritrade's Millennial clients were most enthusiastic about buying Microsoft (MSFT). And they sold Nokia (NOK) and Crowdstrike Holdings (CRWD).
It's not surprising that volatility in the equity markets continued in April, as "market expectations about interest rate hikes are changing rapidly," Metzger said. 
The Trader Sentiment Survey studies the outlooks, expectations, trading patterns and points of view of traders at Charles Schwab (SCHW) and TD Ameritrade â defined as those making more than 80 equity trades, more than 12 options trades, or those who make futures or forex trades over the course of the year. The study included 845 trader clients at TD Ameritrade and Schwab between the ages of 18 and 75 and was conducted from April 6 to 17, 2022.
The IMX value is calculated by a proprietary formula. Each month, TD Ameritrade pulls a sample from its client base of funded accounts, which includes all accounts that completed a trade in the past month. The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly IMX.
Last week, BofA's Buy the Dip Screens: bear market rally stocks and beaten-down tech names