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Market Preview: Blame It on Ben

Stocks in this article: LULU MW SPY ^DJI ^IXIC ^GSPC

NEW YORK ( TheStreet) -- Call it whatever you want -- a relief rally, an oversold bounce, short-covering -- Wednesday was the best day for stocks this year and Ben Bernanke doesn't want to do anything Thursday to ruin the good vibes.

The Federal Reserve chairman is giving testimony on the central bank's economic outlook and policy before the Senate's joint economic committee at 10 a.m. ET, and it's a good bet that speech is getting a strict going-over after Wall Street took the idea that more stimulus is forthcoming and ran with it, sending all three major U.S. equity indices up more than 2%.

The buying was strong right up into the closing bell as the Dow, S&P 500 and Nasdaq all finished at their highs of the day. The debate about what exactly the Fed might do though is more interesting. Federal Reserve Bank of Atlanta President Dennis Lockhart fueled much of the market's optimism with his comments on Wednesday but extending Operation Twist doesn't seem like all that much to get excited about.

The idea that a massive coordinated intervention by the world's central banks is in the works is getting some play as well, and the market would likely take off if that happened as a concrete plan for dealing with Europe's debt situation would presumably be on the table after years of ill-conceived quick fixes and obfuscation.

Speculating on the structure and many moving parts of such an action is a tall order but Spain's rapid deterioration may well be enough to spur on that level of cooperation. On the other side of the argument, the United States getting heavily involved in a bailout of Europe is a hard sell in an election year with job creation starting to sputter a bit. QE3, another round of asset purchases, could be the happy medium.

Either way, Mr. Bernanke's every utterance is going to be big news all month with the central bank's next policy meeting coming on June 19-20, right around when Greece goes to the polls.

The historical track record for stocks during an election year is one of the underpinnings of the ultra-bullish stance that Canaccord Genuity U.S. equity strategist Tony Dwyer is maintaining with his year-end target of 1575 for the S&P 500, a level that implies potential upside of 20% from Wednesday's close at 1315.

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