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S&P's Best Month Since Jan. 1987

The S&P 500 is now up 12 percent for the month, the best month since January 1987. That's a problem for some fund managers.

At the open today (Thursday), there was a buzz on the floor of the NYSE. I mean volume. Even 10 minutes after the market opened, at 9:40am ET, traders were active. That's on top of a very active overnight session.

We are now approaching the end of the month. You are a fund manager — you're about to send out your monthly letter to investors — and you are up, say, 4 percent (I hear Paulson is up about 1 percent).

Not that up 4 percent is bad. In fact, up 4 percent on the month might even be construed as a hot hand in this market. Hedge funds are supposed to produce absolute returns...in some circumstances low volatility and low correlation are good.

Still, is there any doubt that guys are being forced into the market? There was big volume in futures overnight. Traders who were heavily short, who have been covering for two weeks, are forced to cover even more, or simply to buy in.

Euro-skeptics? There's plenty of them — in fact they are the majority of traders (see my prior post for a rundown).

But the guys who have to make numbers are not buying into the market on some intellectual conviction the crisis is over, they are being forced into the market.

The big issue: how long to the next crisis — on Italian debt?

Elsewhere: ISDA says Greek debt deal not a default. There's been some suspense awaiting a comment from the International Swaps and Derivatives Association as to whether this "voluntary" restructuring of Greek debt constitutes a default for the purposes of those holding credit default swaps (CDSs). The response is now posted on the ISDA website:

"Based on what we know it appears from preliminary news reports that the bond restructuring is voluntary and not binding on all bondholders. As such, it does not appear to be likely that the restructuring will trigger payments under existing CDS contracts. In addition, it is important to note that the restructuring proposal is not yet at the stage at which the ISDA Determinations Committee would be likely to accept a request to determine whether a credit event has occurred."

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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