Market Update: Crude Oil’s Freaky Mirror Image

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The headline number on this morning's crude oil inventory report was an almost perfect mirror image of last week'

The consensus was -850K. The actual number was +2501K.

Last week, the consensus was +950K. And the actual number was -2508K.

Weird, huh?

Now let's talk about the reaction.

WTI crude is over $1 off morning highs, and the VIX has spiked to 13.20.

The weak oil report is impacting sentiment already. The ISE Sentiment Index is at just 39 (39 call options bought for every 100 puts).

However, as it stands now, we're only seeing intermittent weakness in equities.

The S&P 500 is down just -0.2, and I'm seeing one very important pocket of strength: the S&P Biotech ETF (XBI) is up 1.4%, and it is just plain hard to bet against this market when biotech is doing so well.

We have not had a real down day since June 27.

If today is to be the start of something real for the bears, they've got to attack biotech.

They've already started beating on some of the hot new issues like Acacia (ACIA) and Line Corp. (LN), but biotech is key.

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