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Smart Money Leaving Commodities for Tech?

Is this the beginning of a rotation in the stock market? There's debate about this, but there are signs that some smart money is positioning themselves for a rotation out of commodities -- and into tech.

This has been spurred by concern that the Fed will begin sounding more hawkish on inflation tomorrow. This (along with some signs that inflation is moderating in Europe) is giving a modest boost to the dollar in the last week.

The result: Money has been quietly coming out of commodity stocks like gold and metals -- but even out of agricultural stocks, despite stellar earnings.

At the same time, classic tech momentum stocks like Google, Baidu.com, Research in Motion, and Apple have broken out to multi-month highs.

Are the fundamentals for commodities falling apart? No. Demand for gold remains strong. Ol is at 116.. potash is contracting at $1000 a metric ton. Steel prices remain firm. Iron ore prices are rising. But the commodity/commodity stock trade is very long in the tooth (materials stocks are up over 100 percent in the past five years), and it is, as traders say, a very crowded long.


Questions? Comments? tradertalk@cnbc.com

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