Assessing various implications - of our anticipated reflections of slowing inflation in the upcoming CPI is only somewhat a matter of speculation. Why?

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Since it is pretty evident a number of sensitive price sectors have rolled-over or are nearly doing so (Oil, then commodities as well as 'some' foodstuffs and so on), with Housing the difficult one because nobody wants to do get caught in a new high rate mortgage nor do those fortunately to have a low rate one risk venturing into that arena again).  

I believe that basically means there is little likelihood of the Fed following CPI with extremely hawkish rhetoric, even as they will hike again and proclaim the staying their course and so on.

Many technicians view the recent rally as a 'mirage', and for that matter they have held the same view since the June lows. Hence reminiscent of March of 2020, when 'they' were waiting for the re-test that never occurred. Not to be a bit repetitive, I do not dismiss the prospects of post-Expiration (follows CPI of course) risk returning.

But that doesn't make the preceding rebound merely a 'mirage' of some sort, and for another reason. Because you now have more distance to 'trigger point levels' that worry technicians (and money managers who tag-along for a ride), it actually reduces risk with regard to the depth of an ensuring decline. 

I'd had the view that inflation was slowing, that inflation rates won't return to a similarly low level of the past, but that a market decline won't be catastrophic if it's anything other than a flat-out crash such as invasion of Taiwan or Putin hitting Ukraine with nukes.

I'm more concerned about Taiwan in that regard, since Beijing will view both of the supporters of Taiwan (Japan and the United States) as less prepared in the current environment than they will be in the future. To wit: weapons stocks (inventory) has been drained by the Ukraine strain, and while many military contractors may benefit from that, it has created near-term bottlenecks. I'm of course not suggesting less aid to Ukraine, to the contrary more and get this horror in Europe over with, and perhaps sideline Czar Putin in the process.  

In-sum: 

We continue stable-to-firm ahead of CPI, later Quarterly Expiration which promises to be interesting, and with S&P at the higher projected levels.

There is a bullish alternative that is barely recognized beyond this week, and it may not be known, regardless if defensive action returns after our rally into and beyond (even if 'good news selling' appears), and that is 'peace breaking out'. The back-channel chatter about Russia and Ukraine negotiating about a neutrality around the nuclear plant is a hint that there is communication about disengagement of some type, rather than escalation.

What if that expands into a ceasefire and/or overt Russian withdrawal (rather than the so-far described as 'redeployment'). Oil would drop and then actually rally, because it would suggest an eventual return to normal European supply levels, but also improved economic prospects, which are pretty dour just now.

Just thought I'd mention this 'in-case' the surprise becomes (sure corrections) the June low for S&P isn't entirely revisited, and the hedge managers crazily miss-out yet again. Will that happen? Nobody knows, but it's a possibility. 

The TIPS are still suggesting 2% inflation rate a year from now. I don't dispute that given the data is showing the (preceding) 'peaking inflation' I had talked about in July and August (mostly as Oil peaked near 120/bbl). 

Oil, water, wages and war are all variables, not to overlook the Earnings Guidelines, which really haven't been confronted by at best a majority of companies. In some cases, like Semiconductors, it's almost impossible in the short-run until we know where China stands and ..avoid war.

So after a slightly soporific Monday, which saw the Volatility Index  (VIX) firm while the S&P (SPX) as well as up, sort of tells you traders are a bit wary (if not bearish) ahead of CPI in the morning. I agree that we should likely see a pullback, but remember if it goes up and down (or down and up), we still have Expiration later this week.