The Cliff

I can't bring myself to say the two words together, I'm tired of hearing them, over the cliff, through the cliff, retroactive, deadlock, impasse, etc., etc. etc.

If you are listening to the news, not only does there seem to have been no progress made, there's talk that even if a deal were reached, it couldn't be implemented in time.

Curiously, one of the first markets to open is acting as if nothing is happening, which is true, but in this case that's suppose to be bad. The Currency/FX markets have opened and the EUR/USD has barely budged so far... Odd

Friday the pair was flat most of the day, the open for the week has the pair in the same range, not what I would have normally expected under normal market conditions.

Guess what?

As I write, the Futures market just opened and guess what happened there on the open at least... The same thing.

 SPX futures open nearly totally flat from Friday's close, but have that same (similar) 3C positive divergence from late Friday during the plunge that looked very much like the plunge was being accumulated, especially in NASDAQ futures.

 A wider view of ES including Friday in to the plunge and the positive divergence during the plunge.

NASDAQ futures from late Friday and tonight's open haven't moved at all and the NASDAQ futures had a larger positive 1 min divergence in to the sell-off, that is what 3C does, it contradicts price to give us an edge and as of the plunge on Friday it looked (3C) like someone was buying the futures on the cheap.

Did they expect weekend negotiations to solve the problem? Did they figure they'd run some sort of rally overnight amidst low volume and make money on it or do they know something we don't.

One of the hardest concepts for people to grasp (and I'm not applying it to this situation, just letting you in on it), is that with the market , IT IS NOT THE NEWS THAT MATTERS, IT'S HOW THE MARKET REACTS TO THE NEWS. Which should tell you that sometimes even when the news seems horribly bad, the market reacts in a much different way than what would seem logical- does that happen tomorrow with no F. Cliff solution? I don't know, all I know is what I saw late Friday, positive divergence in the futures markets with regard to the Stock Averages like the SPX and NDX and some strange activity in other risk assets that should plunge with stocks as they are the same category, "RISK ASSSET", but many did not late Friday.

This may be very simple and turn out exactly as it looks as of this hour or this may be one of those times when the phrase, "It's not the news, it's how the market reacts to the news" that mystifies us all and shows us that the market is not at all the seemingly logical beast we think it is, where 1 and 1 equal 2, but something else that is executed in advance and seems to defy all reason. We'll find out in about 15 hours, but there's a reason they call smart money "smart", it's not so much they are smart, it's more they are running the show in the short term.