Testimony from Federal Reserve Chair Janet Yellen and Ukraine are what traders say could most affect markets in the week ahead. Stocks marched into record territory in the past week, but bonds are showing signs of apprehension both about the Ukraine situation—and the economy and the Fed. So that makes Fed Chair Janet Yellen's two appearances before Congress in the coming week the main attraction. She testifies before the Joint Economic Committee on the economic outlook Wednesday and before the Senate Budget Committee Thursday.



"She's walking a fine line here. She's trying to tell us: 'Things are getting better. We're happy with that. We're cautiously optimistic, but we want to see the improvement extend beyond the headline numbers,'" said Ward McCarthy, chief financial economist at Jefferies. "I think that's the message." There is also important ISM data on services sector activity and hiring Monday and the Treasury auctions $69 billion in 3-year and 10-year notes and 30-year bonds Tuesday through Thursday. China manufacturing and services PMI data Monday and Wednesday will be important, as will Thursday's European Central Bank rate meeting. Earnings season continues with about 75 S&P 500 companies reporting, including Pfizer Monday, Disney Tuesday and Tesla Thursday. Weekend headlines are expected from Berkshire Hathaway's annual shareholder meeting, where Warren Buffett will answer questions from investors for six hours. Read MoreAbout that jobs report...maybe it wasn't so great

Stock traders will also be watching the bond market in the coming week. A healthy jump of 288,000 non-farm payrolls in April drove curve flattening trades in Treasurys Friday as traders bet that the Fed could start to hike interest rates sooner than expected. But buying in the long end also reflected concerns that a large number of people dropped out of the work force, helping shave the unemployment rate by 0.4 to 6.3 percent. "I think right now the market is pretty confused by the Fed," McCarthy said. That was some of the talk around the abrupt flattening of the curve. The 5-year yield versus the 30-year Friday flattened to a level not seen since 2009. The yield on the 30-year fell below 3.4 percent, a level last seen in July, 2013.

Traders on the floor of the New York Stock Exchange. Getty Images

The 10-year yield Friday touched 2.57, its low of the year, in part on worries about a military escalation in Ukraine. Fears about the economy have also been feeding the move lower in longer duration yields. First-quarter GDP data got the market going this past week, and the paltry 0.1 percent growth reported Wednesday quickly turned to a negative number when more data on construction was available Thursday. But the data also shows the effect of bad winter weather, and traders looked to the April jump in hiring as a sign of a snap-back in spring activity. Many economists see second-quarter growth rebounding to 3 percent or more. Traders said another big driver of the move in 10-year notes was short-covering but also positioning for the new month. Plus the decline in other sovereign yields has made U.S. Treasurys more attractive. The lower yields would be good for mortgages and housing, an area of the economy that has been stumbling. Read MoreCashin: Traders remain cynical on Russia

Economists said the drop in labor participation will heat up the debate within the Fed on how effectively it addresses long-term unemployment and how much slack there is in the economy. In its statement, the Fed has said its easy policies are appropriate to support progress toward maximum employment. That debate is adding to the confusion among traders over what would trigger the Fed's move to raise rates from zero, expected sometime in the second half of 2015. Some now expect it to move sooner, and that sentiment helped send short-end yields higher Friday. So traders will strain to see any clarification in Yellen's comments. "They have some work to do on both forward guidance and the exit strategy. What she's going to keep talking about is the high unemployment rate for the long-term unemployed. That means lower (rates) for longer," McCarthy said.

As for stocks, the Dow set its first record close of the year Wednesday after the Fed meeting, and the S&P 500 touched its record closing high intra-day Friday but those gains faded as it bucked against resistance above 1,885. The Dow gained 0.9 percent for the week, ending at 16,512, and the was up nearly 1 percent at 1,881. The Nasdaq outpaced those gains, rising 1.2 percent to 4,123, and the Russell 2000 lagged, gaining a half percent to 1,128. Read MoreCan these 'bad news' stocks rally back?

Technical analyst Ari Wald, of Oppenheimer Asset Management, said the tide may be about to turn for the momentum and internet names that have been crushed since late February and early March. "I think they're at a point from a trading perspective, that they're so bad they're good. Some of the bigger cap tech stuff looks a lot better than the internet names," he said. Read MoreJobs number vs GDP growth: Which economy is it?

Wald said he sees a lot of uncertainty in the market but he's still bullish. "Even in my own community, there's a lot of 'sell in May' studies being sent around, but I can't help but think some of this beaten down stuff will rally," he said. He said the S&P is meeting resistance in an uptrend, in a band between 1885 to 1890. "Overbought in an uptrend is not a sell signal, but it's a stop buying signal," he said. "We think the risk is the market moves sideways here rather than any abrupt reversal."