Investors are putting their cash into more growth-oriented sectors, possible setting the market up for further upside, says John Spence of ETF Trends.

The latest weekly exchange traded fund flow data reveals investors are rotating away from defensive ETFs, which led the way through most of 2013, but are now taking a back seat to cyclical sectors.

For example, Health Care Select Sector SPDR (XLV) and Consumer Staples Select Sector SPDR (XLP) saw the heaviest outflows last week, according to IndexUniverse data. Utilities Select Sector SPDR (XLU) was also on the list of ETFs with the biggest redemptions last week.

Stable, dividend-paying sectors such as utilities, consumer staples, and health care had paced the market since mid-April. Yet the recent outperformance of growth-oriented sectors is seen as a healthy rotation that could help push stocks even higher.

During the most recent leg of this rally, the utilities, consumer staples, and health care sectors have all underperformed the S&P 500, says J.C. Parets at the All Star Charts blog.

"Meanwhile, it's been materials and energy that have led the way," he notes.

Furthermore, PowerShares S&P 500 Low Volatility (SPLV) and iShares MSCI USA Minimum Volatility (USMV) were among the ETF outflow leaders last week. This is another sign that investors are shifting away from defensive ETFs.

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