Short-term trend (DAILY CHART) –  BREAKOUT: Last week, we were unsure if there was going to be a "head-fake" or a "breakout." Now, SPX has spoken. It broke out firmly to the upside, rising from 4070 to 4136, an impressive 66-point rally. Most importantly, SPX is well above its three major moving averages. As a result, SPX is already up by 7% YTD. Note: Futures are lower on Monday morning.

Long-term trend (WEEKLY CHART) – RALLY. SPX on the weekly chart appears to have broken out of its trading range last week. If it can surpass resistance at 4200, then all bets are off (meaning we could go even higher).

MACD (DAILY) = BULLISH. MACD has broken above its zero line and 9-day signal line on the daily and the weekly chart. (Note: I switched from monitoring weekly to daily). FYI, even the weekly MACD is strong.

RSI: (S&P 500) @63.56 (DAILY) OVERBOUGHT. RSI is still overbought (on SPX) but not at extreme levels (70 and higher is extreme). Let's see how high RSI can go before the market comes back to Earth.

Comment: Many pros were bearish last week, especially because the Fed was going to raise interest rates. As expected, the Fed raised rates by a measly 25 basis points, a clue that the end is near for rate tightening. According to the Fed, inflation is nearly under control, a reason even higher interest rates are not necessary right now (says the Fed). In a nutshell, that is music to the ears to Wall Street.

Nevertheless, there are many risks looming, starting with a speech by Fed Chair Powell this week. I'm certain he will say that inflation is under control and that we are headed for that elusive "soft landing." Last week, Powell said that the "disinflationary process has started."

It's too early to say if inflation is really not a problem anymore, or if that is wishful thinking. Unfortunately for the bulls, the Fed made it clear they have no plans to cut rates anytime soon.

Bottom line: Based on the indicators, we are headed higher until the market gets too frothy, and then it will reverse direction. The speech by Powell this week should affect market direction. The bulls will feel emboldened in the short term, but don't ignore the risks.