This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. A pretty linear, intuitive market response to a rare downside surprise in inflation, as traders chose not to overthink another dose of support for the view that a "soft-ish" landing for the economy remains a viable possibility. A flat CPI month over month and softer core reading quickly took some anticipated Federal Reserve tightening out of the market's implied forecast, even if the data were not a clinching argument for the case for a quick normalization of inflation or imminent "pivot" away from determined monetary tightening. The S & P 500 marshalled the tension-release to run above the early-June high that had capped it for more than a week and to surmount the 4,200 level — a three-month high and less than a percent short of the 4,230 threshold which marks a 50% recovery of the entire bear-market drop. It's also where the market sat at a couple of crucial catalyzing moments for the tape this year. In other words, those who still are playing in "sell-the-rips" mode should find this a pretty good spot to unload equities or reload on downside bets. Short-term sentiment has brightened quite a bit and the VIX is below 20, so there is some tactical basis in this view. Still, pending closing stats, this ramp since mid-June has been broad and has checked off some of the boxes one would look for in identifying a more lasting bottom in place, after the S & P 500 underwent an "average" bear-market drop of 24% and saw valuation compress about as much as tends to happen in a bear phase. True, the top-down S & P 500 is almost back up to 18-times forward earnings, pretty high historically. Yet, the equal-weight S & P 500 and small-cap stocks have built up a better valuation cushion. One encouraging bit of the CPI report was the breadth of categories showing lower prices in July vs. June. This plot of the net percentage of CPI items rising in price plunged down into the long-term "normal range." Source is Exante Data. Some steam has come out of two-year note yields, suggesting the Fed could soon slow or end its rate hikes, but of course it's all conditional on a defined downtrend in inflation numbers. August's CPI and other PCE reports will come out well before the Fed's next policy meeting in late September. And some are arguing that higher stock prices and tighter credit spreads are simply loosening financial conditions enough to replenish the Fed's capacity and appetite for more tightening. It's encouraging to see banks, industrials and materials stocks outperform Wednesday, goosing the cyclicals-over-defensives trend. Combined with Friday's jobs number, the CPI offers more hope that the economic cycle has more room to run pretty hot. Note the VIX drop, which is less a red flag for stocks than a completely rational response to a market where realized intraday volatility has been low, catalysts have been cleared (jobs, CPI, earnings) and it's …August. Market breadth is quite good, and we're on the verge of a 90% upside volume day for NYSE, which would get some technical analysts incrementally bulled up if it happens.