Hot Money Sector Rotation Hits Gold: Dave's Daily

Gold started selling off the previous week after the Fed planted a QE story at the Wall Street Journal on Wednesday. With only a limited bounce thereafter the selling has been consistent. Why? Hot money is leaving gold markets and moving to stocks. It doesn't help gold that the dollar is also rising returning both to their normal inverse relationship. The dollar hasn't rallied dramatically but enough to chase gold bulls. Momentum for U.S. stocks is strong even with a smaller than usual number of players as volume remains historically light.

A stronger dollar isn't helpful to commodity markets generally which also negatively affects exporters, industrial (XLI) and materials (XLB) sectors. Apple (AAPL) continues to lead the tech sector (XLK) higher. Perhaps more encouraging is the ongoing strength in financials (XLF) and banks (KBE & KRE) despite larger losses in Citigroup (C) and MetLife (MET) after failing stress tests.

Stocks Wednesday were choppy and in consolidation mode after Tuesday's large rally. Economic data was scant overall and let's not forget, we're approaching quadwitching Friday.

Volume remained on the light side once again and breadth per the WSJ was negative overall.

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