Of course you can sell and buy, but the question is if you can qualify for a new mortgage.
I understand you have great credit, but if you will short sale your home your credit is not going to be that great.
I'm not sure if its good now. normaly after a loan modification the credit could be at risk(please check your credit again).
The second issue is your income. These days lenders are looking at the borrowers income more then looking at just a good credit.
About your house that is not selling, I can get you someone good from your area that can help you to sell your home quickly.
Let me know.