The Great Rotation May Be Just a Grand Illusion

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Two months' worth of investor enthusiasm took a break last week, indicating that despite continued gains, at least some apprehension remains about the stock market.

Stock-based equity and exchange-traded funds lost $7.3 billion during a bumpy week that nevertheless saw the Standard & Poor's 500 rise 1.75 percent, according to Lipper. The data covered the week through April 24.

Two items of note were a further exodus from popular exchange-traded funds, which have surrendered cash five of the past six weeks, including $8.4 billion for the most recent period; and the latest reason not to believe the Great Rotation theme of money moving from bonds into stocks.

(CNBC Explains the World of Exchange-Traded Funds)

The ETF story is probably a bit less compelling, as the industry has taken in a net $61.6 billion this year, though the outflow trend bears watching. Lipper said mutual funds have had 16 straight weeks of inflows, or $92 billion year to date.

As for the bonds vs. stocks duel, investors still want fixed-income exposure.

While equity funds were losing money, bonds attracted $4.8 billion, prolonging an almost uninterrupted pattern this year.

For example, the Vanguard Short-Term Bond Fund has taken in the third-most ETF assets—$2.6 billion—this year, while the iShares Barclays TIPS Bond Fund took in $555 million in the most recent weekly reporting period, the week's third-highest inflow, according to Index Universe.

Looking over the year, the evidence couldn't be less compelling for a move from stocks to bonds.

Fund flows, according to Thomson Reuters, show equity funds taking in $117.8 billion and bond funds gathering $115.7 billion - a step up for stocks, no doubt, but hardly a sign that fixed income is suffering.

(Read More: Stocks, Bonds Tell Two Stories; So Who's Right?)

Still, that hasn't stopped the Great Rotation chatter.

"You have this huge migration moving from grossly overweight fixed income back into equities," said John Stoltzfus, chief market strategist at Oppenheimer.

As to the data showing continued appetite for bonds, he said, "we think it's the two steps forward, one step back type of recovery process. ... The equity market has benefited over the last few months from people beginning to lighten up on bonds."