Why Buying Remains "Muted"

There are several reasons we ought to get modest buying interest today: 1) ISM was strongerthan expected, 2) start of the quarter is traditionally more of an up than down day, as traders put new money to work, and many nibble on beaten-up groups, and 3) we had a 90% downside day June 26th, which coming on dramatically oversold conditions should attract some buyers.

And yet, buying interest remains muted, a fact that is preoccupying technical analysts this morning. For example, Lowry's noted that "the failure to rally is occurring in the face of persistent short term oversold readings suggests substantial underlying weakness in the market."

There's no doubt we are in unconventional times. The big issues aren't going away: capital raising/writeoff worries for the financials, tapped out consumers, no clear bottom in housing, and global inflation.

Still, the question remains: how long will the "go long commodities/short financials" trade go on? Forget energy stocks--materials like steel and metals are already looking toppy, with many in a downtrend for the past two weeks:

--Freeport-McMoran topped out in May;

--Nucor at the lowest levels since April;

--Alcoaat the lowest levels since February

--International Paper at a 17 year low.

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