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Bulls ready to trumpet new highs; caution prevails on rally

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Is the bull back in town?

Stocks may now be on the path to new highs, though the journey will depend on whether the chill on the economy is purely from winter storms.

In her first congressional testimony as Fed chair, Janet Yellen on Tuesday convinced the markets that she is not an unknown quantity but a dovish voice very similar to former Fed Chairman Ben Bernanke. She said the Fed should continue to taper its quantitative easing program unless there is some notable change in the economy, and that the Fed plans to hold short-term rates low for a long time.

That reassurance and an announcement by Republicans that they would put the debt ceiling to a vote with no conditions triggered a powerful rally that drove the through key technical levels to 1,819, a gain of 1 percent.

(Read more: Yellen just addedpressure on emerging markets)

"The fact that we've punched back up through what I thought would have been [an S&P 500] mid-1700s trading range suggests the market is sniffing out something better than that," said Mark Luschini, chief investment strategist at Janney Montgomery. "That may be that a lot of attention going to the weather may actually be true. Janet Yellen's testimony did nothing to dissuade some people who view her as dovish."

But some technicians remain cautious and say that the market may not yet be firing on all cylinders.