Unusual Investor Behavior; Caesar's Board Deal-- ICYMI

The market is up on the year, but there's some strange investing behavior happening at the same time.

Author:: Jacob Sonenshine
Publish date:: Mar 1, 2019 4:17 PM EST

Aside from Lyft's filing to go public, it was a pretty quiet Friday.

But we still have info to share.

Unusual Behavior

Usually, when there's 'risk on' sentiment, cyclical sectors of the economy like materials, industrials, consumer discretionaries and financials see their companies stock prices move upward. When there's 'risk off' sentiment, defensive sectors like consumer staples, utilities, healthcare and telecom see stock prices move down, as demand for those stocks fall. The past two months have been strange. "It's been a great start to the year but we are beginning to see the market become uncorrelated, where sectors we'd normally label defensive or cyclical aren't exactly moving in lockstep," said Mike Loewengart, vp of investment strategy at E*Trade.

E*Trade's customers are losing interest in some defensive sectors and gaining interest in others. For the full months or January and February, money flowed into defensive sectors like utilities and communication services, on net, while money flowed out of healthcare, another defensive area.

And while there was a move into several defensive sectors named above, there wasn't exactly a definite flow into cyclical sectors. Money flowed out of materials, on net. Materials and healthcare were the bottom three sectors of interest for the two months, a strange mix.

The market has been grappling with conflicting economic data.

Retail vs. Institutional Money

Retail investors have not exactly been doing what institutional investors have done in 2019. The NYSE Healthcare Index is up more than 5% year-to-date, as retail investors have flowed out of the sector. The Invesco Materials S&P U.S. Select Sector ETF is up more than 5% year-to-date, as retail investors have moved out. Of course, the two broad groups of investors have not directly opposed each other in capital flows, but there's some notable discrepancy.

TD Ameritrade Trading Strategy Manager Shawn Cruz told TheStreet, "a little bit of profit-taking" was heavily in the mix for some retail investors in February. As the iShares PHLX Semiconductor ETF (SOXX) - Get Report is up 18%% year-to-date, retail investors have steered clear of speculating that there will be a real -- and lasting -- trade truce, which would be a lift to chip companies.

Caesar's Entertainment

Shares of Caesars Entertainment (CZR) - Get Report rose 3.36% to 8.91 apiece Friday after the casino company struck a deal with Carl Icahn that will allow the activist investor and significant shareholder to add three directors to the board.

See why Gap (GPS) - Get Report stock, RealMoney's stock of the day may be at a cross-road.