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Dow ETF had its biggest one-day outflow ever but that doesn't necessarily signal a bearish turn

The Dow Jones Industrial Average is trying for nine straight positive sessions, hitting records in every one of them, but some investors have been pulling back from the most popular way to invest in the average.

The SPDR Dow Jones Industrial Average ETF Trust (DIA), an exchange-traded fund that tracks the blue-chip index, has seen sharp outflows, including the biggest one-day redemption in the fund's history.

About $2.1 billion has been pulled from the fund over the past week, according to FactSet data, with nearly all of that coming on Feb. 15, when there were outflows of $2.03 billion. That represents the biggest one-day outflow for the fund in its history; it was launched in January 1998.

The outflow didn't come in response to a dramatic market move, as the ETF rose 0.6% on the 15th. The size of the transaction prompted speculation it was due to a single firm unwinding its stake. And while investors are increasingly skeptical (http://www.marketwatch.com/story/by-one-measure-stock-valuations-are-at-their-highest-level-since-2004-2017-02-17) about whether the market's fundamentals justify its valuations, a sharp outflow does not necessarily indicate a bearish call on the point of view of the investor or investors.

"A redemption doesn't mean a position change, just a position unraveling, which could be on the long or the short side," said Michael Venuto, chief investment officer at Toroso Investments. "In this case, it looks like the view of one investor for the most part, and it would have to be a tactical view because the Dow isn't a core holding the same way an S&P 500 ETF is."

The biggest S&P 500 fund, the SPDR S&P 500 ETF Trust(SPY), saw outflows of $228.2 million over the past week. A different fund that tracks the same index, the Vanguard S&P 500 ETF (VOO) drew inflows of $348.7 million over the same period. Traders frequently use index funds to make short-term positions on broader market trends; of the 15 most actively traded securities in 2016, 14 of them were ETFs (http://www.marketwatch.com/story/heres-how-much-etfs-are-dominating-on-the-trading-floor-2017-01-10).

While the Dow is used as a proxy for the overall market by retail investors, institutional investors pay far more attention to the S&P 500 , which offers a much broader overview of the equity market, with 500 stocks compared to the Dow's 30. The S&P is also market cap-weighted, meaning the biggest stocks have the biggest impact on the direction of the overall index. In comparison, the Dow is price-weighted, so that the most expensive stocks have the biggest pull regardless of the size of the company.