Investing.com -- Retail investors turned net sellers of US equities and options last week on Citadel Securities' platform, marking a shift from the persistent buying that has characterized their behavior in recent years.

Individual traders sold US stocks and options last week, according to Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities. The firm has recorded similar selling activity just 18 times since January 2020.

Net notional spending by retail investors fell roughly 55% in March from the prior month and is down about 70% from January's peak, though retail investors remained net buyers last month.

Periods of retail selling have historically been associated with stronger near-term returns for US equities, Citadel Securities data show. The S&P 500 has advanced about 82% of the time in the two months after similar signals, with an average gain of 4.1%.

Options activity among retail traders is also shifting. While volumes remain elevated, positioning has turned more defensive, with flows skewing modestly toward selling last week and demand for downside protection increasing. Last week marked the first bearish week in retail options activity since late November, according to Citadel Securities data.

Institutional positioning has also grown defensive, though that adjustment began earlier. Systematic strategies remain underexposed relative to improving realized volatility conditions, creating potential for incremental buying flows as markets stabilize, Rubner wrote in a note to clients Tuesday.

The shift follows weeks of volatility sparked by surging oil prices and the war in Iran. The S&P 500 declined about 5% in March as the escalating conflict in the Middle East disrupted energy markets. Brent crude has risen roughly 80% this year.