Smart money moving out of commodities into tech?

CNBC: 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. Oil 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.

MyTake: It is possible that there will be some rotational play but I do not think it will be for the longer term. Besides, there are many value buys with growth potentials on other sectors like oil and gas, consumers etc. in the market. This tech play could be rotational only because the tech stocks have not shown much growth stories since many years ago. For example, Microsoft's application softwares business growth has been zero since four years ago. Besides some bright sparks in some other tech stocks eg Google which shows good growth especially its online advertising revenue, the industry does not have any yet to be launched kick ass revolutionary technologies/gadgets break through that could spark the dot com craze again. Could the possible M&A between Microsoft and Yahoo provides the catalyst? I seriously doubt so. On the other hand, although the strengthening of the USD has somewhat lowered the commodities prices currently, I believe the commodities would still be on the rise albeit slower due mainly to supply/demand factors. According to a study done by Schroders Singapore, over 200 years -average commodities bull cycle lasted 20 years. Energy bull started 6 years ago while agriculture bull just started 2 years ago. So commodities stocks would probably slowed down for a while before continuing its journey to the north again latter.

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