When midsize stocks retreated as their large and small counterparts rose Monday, traders scratched their heads about the unusual activity. The culprit, traders later surmised, was heavy selling in two exchange-traded funds - and the incident underscored the rising influence such funds have on the market.

"The tail was wagging the dog. The mid-cap weakness was driven by the ETF flow," said Jenkins Marshall, managing director of equities sales and trading at Knight Capital.