A reversal is just anything that's a surprise. It's a way of keeping the audience interested.
-- Tony Gilroy



) - Every week I run a screen on my list of over 1,000 ETFs/ETNs to identify which areas of the investable landscape are showing extreme movement. The idea behind doing this is to get a sense of what opposite ends of the performance spectrum may be signaling about investor sentiment going forward.

Take a look below at those ETFs furthest above (extreme winners) and furthest below (extreme losers) their respective 20-day moving averages.

Some very interesting behavior is under way within markets. Following the corrective period of mid-September to mid-November, a vicious V in equities worldwide has taken place undoing much of the technical damage that occurred during the post QE3 period. While the media focused on the U.S. and the "fiscal Cliff," the real story in the past rolling month has been the behavior of Europe.

The Extreme Movers are dominated by overseas developed markets, with Italy (represented by


(EWI) - Get Report

, the Italy Index Fund) France

(EWQ) - Get Report

, European Financials

(EUFN) - Get Report

, the


(FEZ) - Get Report

, and Germany

(EWG) - Get Report

showing the biggest up moves.

Strength in deeply oversold solar companies


is also an indication of sentiment improvement in Europe given how important European demand is for alternative energy stocks.

Regardless, by all measures, Europe has acted as if we are in a global melt-up, similar to that which occurred during the post June 4 period.

The message of the Extreme Laggards is much more nuanced, with Natural Gas

(UNG) - Get Report

, Gold Miners

(GDX) - Get Report

, Silver Miners

(SIL) - Get Report

, Coal

(KOL) - Get Report

, and Africa

(AFK) - Get Report

being the most notable.

The commodities trade remains a challenging one for investors. Much of this may be due to lack of new stimulus measures being announced by new leadership in China. I suspect a reversion to the mean trade will occur the moment the world's second largest economy announces new policy changes designed to spur a pickup in commodity usage.

The bottom line? Europe continues to be the most important area of the market to watch independent of the "fiscal cliff." With the German DAX nearly up 30% for 2012, the surge of late signifies we are in the midst of a global melt-up which could continue.

At the time of publication, the author had no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.