Yellen said she is "staying the course unless the data turns decidedly negative," she will not make any abrupt changes to the withdrawal plan, but at the same time she remains concerned over the "unusually high rate of long-term unemployment" ... calling it potentially "structural." She said she planned to hold rates low and and steady well past the 6.5-percent level of unemployment, which was met with applause.
So, while Janet Yellen did what we expected her to do, the algobots did what we expected them to do — read the headlines, saw "staying the course" and sent the S&P 500 up through key levels, including the 50-day moving average of 1810.
(Read more: Yellen just added pressure on emerging markets)
But pay attention to the volume — or lackthereof. That's a sign that large asset managers have not had a change of heart. Remember — the longer-term asset manager is already invested. It's not that they're not participating. With the Yellen bump — or any other market move higher — they're enjoying the ride. But what's notable is that there was nothing in this testimony that gave them cause to be allocating any new money.
So, take this Yellen rally with a grain of salt. The damage sustained from the selloff last week hasn't been repaired just yet. The issues haven't gone away.
Sure, Congress voted on a continuing resolution to avoid another debt ceiling debacle but they haven't addressed the issues. Macro data in global economies is weakening. And, then there's the impact that further Fed tapering will have on markets.
And, while Yellen's comments were expected and largely positive, she did express some concern about the economy, notably that comment on stubborn unemployment — and that's why longer-term investors need to be cautious.
(Read more: Marc Faber: Here's how much I want stocks to fall)
Considering the 30-percent market gain last year — the market needs to reprice based on all of this new data.
If the market suspects that the Fed plans to reignite the stimulus then, of course, the market will move higher. But if Yellen maintains the course and the economy begins to struggle, then expect an adjustment to prices.
The lack of volume speaks volumes about the mindset of investors. I suspect that we will challenge the all-time highs of 1850 once again. Once we get through this testimony today and Thursday, investors will focus once again on the broader picture — and this will cause a consolidation in prices.
—By Kenny Polcari
Kenny Polcari is director of NYSE floor operations at O'Neil Securities and a CNBC contributor, often appearing on "Power Lunch." Follow Kenny on Twitter
@kennypolcari and visit him at kennypolcari.com.
Disclosure: The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.