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How bad can it be that the worst weekly close for the S&P in 12 weeks of trade was only down -0.50%? At Friday's close the S&P 500 cash settled at 1397.11, up 0.31% on the day, down -0.50% on the week, still up 2.3% month to date and up 11.09% on the year. Six out of 10 S&P sectors closed higher, with the energy sector leading the way. For most of the week the markets were under pressure from uncertainty surrounding China and Europe, but Friday's rally seemed to indicate they were looking past that and gearing up for the end of the first quarter. After a three-day losing streak, the S&P sold off early and then started moving higher. Last week was the worst for the index since the last week of December, when the S&P cash closed down -0.17%. The selloff had many people thinking that the markets were setting up for a correction, but true to form the SPM started to short cover right into the buy stops and in came the index arbitrage buy programs. Once things were in motion, the robots took over.

The view for today: Say hello to Mutual Fund Monday! If the markets go down during T+3, it won't happen until later in the week. It's critical to remember that over the next few days the mutual/investment funds will be marking up the winners and selling the losers. The "selling the losers" part may not happen until later in the week. The way we see it, you have two choices: sell the early morning rally and look to buy the dip or just wait for the ESM to sell off and buy it. As always, keep an eye on the 10-handle rule and always use stops.

It's 5:30 am and the SPM is up 3.4 handles at 1397.50, crude is down 25 cents at 106.62 and the EC is trading 1.3236.

In Asia 7 out of 13 markets closed lower.

In Europe 11 out of 13 markets are trading higher (DAX up +0.60%).

The main headline: "Stocks Seen Higher Ahead of Home Sales Numbers."

Today's economic and earnings calendar starts out with a monetary policy panel discussion in Paris with Philadelphia Fed president Charles Plosser, former Bundesbank head Axel Weber and Christian Noyer, governor of the Banque de France. Federal Reserve Chairman Ben Bernanke speaks at the National Association for Business Economics in Arlington, Va. Congressional Budget Office Director Douglas Elmendorf will also speak, following Bernanke at 8:45 ET. Chicago Fed national activity, pending home sales index, Dallas Fed mfg survey.

VOLUME: 1.55mil ESM and 8k SPM traded

SPREADS: 10 SPM/SPU spreads traded

FV: S&P +5.50, NASDAQ +14.50

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.