Biotech powers up! And 4 other thoughts on today’s action…

1) BIo-Defense

Biotech (IBB) put up a nice defense against that first little dip that started at 9:45 a.m. ET, and IBB is up 1.5% on the day — good stuff!

The rest of the market was looking a little shaky, but traders tend to feel good when biotech is going strong.

I'm positioned bearish near-term so I want biotech to get hit hard, but I'm not holding my breath just yet.

2) OPEC Reality?

It seems like traders are finally remembering the disappointment at the June OPEC meeting meeting, when many people were expecting a production freeze.

Crude oil is down -2.8% and oil service names are feeling the ugly stick.

Let's see if the rest of the market starts to notice.

3) HYG

HYG has been quite strong as of late courtesy of the oil rebound. (crude oil prices and high-yield energy bond prices are closely tied for obvious reason).

I'd closely track it, particularly its relative performance against Treasury ETFs like IEF.

Bad high-yield makes equity markets nervous.

4) Declining Earnings — Who Cares?

The permabears are out chattering about the fact that we're on a 5-quarter streak for negative earnings — something we haven't seen since the 2008-2009 crisis.

Does it matter?

Sure! But you know what matters even more? The fact that while bad, earnings are not quite as awful as expected.

I'm choosing not to care about this until Mr. Market tells me it's important via price action.

5) And the Swoon….

As I'm writing this, SPX has come off morning highs by a few points and approaching the morning low of 2175.96.

It's been a long, long time since we've seen a hard intraday reversal that turned into a meaningful down day.

Will we get it today?

Biotech and oil have the answer, so watch em!