Inflation came in hotter than expected at over 9% but the markets held up pretty well. The Dow fell 208 points on light volume. The advance/declines were negative. The summation index is moving sideways. There was a big gap down at the open but no follow through as we traded back and forth for the rest of the day. The Dow was the under performer. When the market holds up in the face of bad news, that's usually a bullish sign. The short term indicators for the S&P 500 are still pointing down at mid-range levels. I'm not saying we are going to get some kind of strong rally here but I don't things are about to fall apart again either. I do think that we'll be marking time until the Fed meeting in a couple weeks. The summer doldrums could show up next week. Gold was up $7 on the futures as it made a comeback today as well. The US dollar was slightly lower while interest rates were mixed. All in all we did not see big sustained market reactions to the inflation report. The XAU was up 2 2/3, while GDX rose 1/2. Volume was good for a change. I'm still considering the August or September GDX calls since the gold shares are so blown out to the downside. However the longer term RSI signal does not look like it will happen. Mentally I'm feeling OK. The VIX bounced around and ended the day lower which doesn't fit with a down market. Not sure what to make of that. The Bollinger bands on the VIX are starting to contract which implies a big move coming there one way or the other. Still more economic data to sift through the remaining 2 days this week along with the start of earnings season. I'm on the sidelines for now. Asia was generally higher and Europe lower in Wednesdays trade. We'll keep an eye on the overnight developments.