97 handles, 2 days

Whew.   97 handles is two days is potent stuff, and that's what the Spooz put in from the post-payroll lows on Friday through the high print on Monday (which wasn't that far off the close.)  This was the biggest two-day rally off the lows since all the way back on....August 27, and my didn't that turn out well?

It seems safe to say that the market has experienced quite a bit of psychological trauma over the past few weeks, no matter bull nor bear.  Obviously, sticky money is going to stay invested regardless of what market beta is doing, but you really have to wonder how much more of this the fast money crowd is prepared to take.  Yes, there is ample opportunity if you're a scalper...but if you're not quick (and good), by the same token there is plenty of opportunity to get scalped.

When equities are in freefall, one often hears the hopeful mutter of "turnaround Tuesday."  Now, alliteration is no way to run any kind of investment process, but it does seem to be the case that outsized moves either side of the weekend tend to reverse themselves come Tuesday.  You'd have to think that chances favor at least a bit of consolidation today after the furious price action of the last week.

What's notable is that- stop me if you've heard this one before- Europe appears to have quite a bit more upside on the charts than the SPX.  Spooz, for example, are roughly 1.5% off the highs of last month's Fed day....but Eurostoxx are nearly 4% lower.  The DAX is nearly 7% lower, but obviously there are some extenuating circumstances there.

When it comes to European equities, Macro Man feels like he's not only beating a dead horse, but cremating it, burying the ashes, and then proceeding to beat those.  Still, it's helpful to remind oneself that proper macro themes don't always come fruition a few days or weeks after you've made your mind up; some, like fine wine, need to age before they are ready.  Of course, in this game being early often equates to being wrong, so it's important to know when to pull the trigger and manage risk.

From Macro Man's perch, the best way to play the theme at the moment is with toe in the water type sizing; he generally prefers to ratchet up risk with a tailwind, so to speak....and right now, European equities still don't really have that.

Elsewhere, the headline non-manufacturing  ISM was a little weaker than expected, but still quite strong.   Interestingly, the employment component registered its joint 4th highest reading in the 18-year history of the survey.  Curiously, 2 of the other top 4 readings have also come within the last year.  While there's not much month-to-month correlation between this indicator and payrolls, a trend basis they tend to match up quite closely.  As such, the ongoing resilience of the ISM figure is telling.

The upshot of yesterday's frenzy is that eurodollars sold off and steepened; the 2nd vs 10th spread highlighted here yesterday steepened by 3.5 ticks.  It's only a drop in the bucket, of course, but every reversal has to start somewhere.  Whether the reversals can sustain, of course, is another question, as  investors these days know all too well.