Overnight Developments and Continuing Developments

Looking at the ES chart, it stayed right in the range of yesterday's 4 p.m. close with a slight boost on better than expected Chinese Industrial Production data, that was obviously facilitated by a wider monetary base as it seems China's PBoC is now injecting liquidity in to its economy rather than draining it, but again it was a slight boost.

The real initial boost came after the European open when French Industrial Production missed badly at -.6% vs expectations of +.5%. Manufacturing Production missed at -.7 vs last of +.4%. This seems like the bad news is good news in hopes the ECB will open the liquidity gates.

HOWEVER, the main event of risk on overnight comes from a proposal that originally came from John Kerry's mouth, seemingly as a slip up as he tried to correct it later, but in essence the question...

"What would stop a US attack on Syria?"
Kerry: "If they turned over all of their chemical weapons".

Whether this was some face saving way out of an embarrassing Congressional vote that looks like less than 10% of the US House of representatives would support Obama or a genuine slip up, the Russians, French and Syrians wasted no time in saying...

"YES! That's a GREAT idea, we'll get to work on it immediately",  thereby either backing Obama in to a corner or providing the face-saving solution he "seems" to be looking for when he went to Congress in the first place.

Either way, as you saw the "flight to safety" asset,  gold fell hard on the initial news and ongoing deescalation of events via Russian/French and Syrian cooperation moving toward that resolution. Oil also lost massive ground.

However, and I don't know if this is theatrics or genuine, but Obama spokesman Carney said the administration is looking for, "Support to strike Syria TONIGHT".  This could obviously be to light a fire under French/Russian/Syrian negotiations to wrap things up and give Obama a face saving way out of this mess without a strike that is deeply unpopular in the US and Congress or...?

The one thing that is certain is the market HATES UNCERTAINTY and will sell off on a dime if it feels the situation is seeing more uncertainty introduced.

A Syrian strike that was at least a week or more away potentially taking place tonight would be huge uncertainty today unless the market just absolutely does not believe Carney. At the same time Washington is working of the "Other plan" of a diplomatic breakthrough so FUNDAMENTAL events will rule the day.

What happens next though may sneak in to the market well before it is recognized for what it is. For instance, is a negative divergence in the market the result of shifting dynamics that look more like a strike is likely to occur sooner than later OR is the same negative divergence a "SELL THE NEWS" event that a diplomatic breakthrough has been reached?

Either way, only the size and strength of the divergence will tell us what path to take, whether a pullback to the bottom of the range is no longer a probability, if that's so, we have had a strong move which we expected as the larger move after a pullback, perhaps we skip the pullback entirely.

If this is the case, the entire reason for wanting to see a strong move higher is to sell short in to it, thus our strategic game and tactical game depend largely on the tone of underlying trade.

Did Kerry slip on a banana peel right in to  pot of gold (granted, one worth less today than yesterday)?