NEW YORK (CNN/Money) - Sure stocks have stopped to catch their breath, slipping back from highs they hit just over a week ago. But Wall Street's unwavering optimism as the economy continues to limp and the dollar slides may mean that the market could go higher still.

Measures of stock market bullishness are on the rise. The Chicago Board of Options Exchange's Market Volatility index, a good measure of how much fear there is in the market, is down at the lows it hit a year ago. Surveys of investor confidence have been steadily gaining, and the ratio of puts (bets on stocks going down) to calls (bets on stocks going up) has been dropping.

Conventional wisdom says this sort of cheer can be hard to maintain. Especially when most of the news coming the market's way lately has been discouraging -- deflation, however remote, is a threat, the job market is shrinking and much of the first quarter's earnings strength was due to the market's already lowered expectations.

But the problem is that figuring out when the reversal will come, when optimism will fade into pessimism and stocks will head down, can be difficult. Today's happy investors may stay this way for a while.

That's just what may be happening now, reckons Bollinger Capital Management head John Bollinger. He points out that the market's attention span these days for bad news, when it comes, has been short-lived. The market was able to get over the U.S. government's apparent about-face on the strong dollar policy a week ago with very little pain, and was even able to spin it into a positive.

It's a shift in attitude Bollinger thinks will propel stocks to new highs for the year and through the upper limits of the range that has bounded the market since last July. Seeing that breakout will only cause more investors to believe the all-clear signal is has been sounded, and push stocks higher still.

"Unless really bad news flows into the system, we'll do better until mid-summer, I guess," Bollinger said.

But there are people on Wall Street who think stocks are about to start paying attention to the bad news.

"There's an excessive amount of optimism around," said Larry Rice, vice president at Janney Montgomery Scott. "We need a pause. We need a correction,"

• The Conference Board releases the latest read on its Consumer Confidence Index Tuesday. Economists surveyed by Reuters expect that, with consumers cheered by the end of the war in Iraq and the rebound in equity prices, the index bumped up to 83.7 in May from April's 81.
• Economists expect April existing home sales, due out Tuesday, to have jumped to an annualized 5.67 million rate from March's 5.53 million. Meanwhile, the pace of new home sales is expected to have slowed to an annualized 980,000 from 1,012,000.
• April durable goods orders, due out Wednesday, are expected to drop by 1 percent. Much of the expected fall is due to lower defense goods and transportation orders.
• Thursday, the government offers up its second take on what first-quarter Gross Domestic Product looked like. Economists reckon GDP growth will be revised upward to 1.8 percent from 1.6 percent.
• The University of Michigan offers the final reading on its Consumer Sentiment index Friday. The preliminary reading came in at 93.2.
• Economists expect the Chicago Purchasing Managers' Index climbed to 48.5 in May from April's 47.6, registering just a slight improvement in Chicago area manufacturing.