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Market Preview: Ben's Back

Updated from 7:40 p.m. ET to include additional commentary on economic data and Staples.

NEW YORK ( TheStreet) -- As stocks continue to churn higher in 2012, the prospects for another round of quantitative easing grow dimmer.

This, of course, could ultimately be a problem for those whose investment thesis for the new year was based on an expectation that the Federal Reserve would come through with another round of bond-buying in the first half.

The market is all smiles right now with the Dow Jones Industrial Average notching its first close above 13,000 since May 2008, the S&P 500 breaking through chart resistance at 1370, and the Nasdaq Composite sitting at levels unseen in more than a decade, poised to make its own run at a big, round number: 3000.

Year-to-date, the Dow is up 6.5%, the S&P 500 has risen 8.8% on a price basis, and the Nasdaq has advanced an incredible 14.7%, thanks in large part to Apple (AAPL) and its 30% rise. Federal Reserve Chairman Ben Bernanke has remained fairly unflattering about the economy, but obviously investors running with the risk-on trade aren't seeing what he's seeing.

Then again, the one thing this rally has lacked has been volume, so maybe there's more pessimism out there than the year-to-date returns would seem to indicate.

Bernanke returns to Capitol Hill on Wednesday and Thursday to give his semi-annual testimony to Congress, and the expectation is that QE3 will remain on the QT for the time being.

"Based on his testimony at the start of this month and the lack of support evident in the minutes from the last FOMC meeting in late January, we don't anticipate that Bernanke will use his appearances this week to make the case for starting a third round of quantitative easing soon," said Paul Ashworth, analyst at Capital Economics, in commentary on Tuesday. "Nevertheless, we suspect that Bernanke will continue to take a pretty downbeat view on the US economic outlook."

Ian Shepherdson, chief U.S. economist at High Frequency Economics, is mostly of the same mind, but he does think the chairman will again make clear that more QE is an option if the economy does stall again.

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