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.

"Election years are seasonal with weakness from April-May, followed by gains from June-Sept., regardless of the outcome of the presidential election," he noted.

The strong start of 2012 also works in favor of the S&P 500 finishing the year in positive territory as Dwyer pointed out that, since 1960, the index has closed up in 19 of 20 instances when January and February are positive months with an average gain of nearly 18%. His take on how investors should approach current market conditions is to bulk up exposure to the financial, information technology and industrials sectors.

"The 2011European Debt Crisis and subsequent drop in global equity markets priced in (via a multiple compression) a recession that we continue to believe remains highly unlikely -- even with renewed European Sovereign Debt fear," Dwyer wrote, adding later: "In our view, outside of a geopolitical shock, the risk in such a bullish fundamental outlook is a rapid and sustainable rise in interest rates. At this juncture, there appears to be very little evidence of that happening, especially with long-term interest rates reaching into new low territory."

In one sign that the market was starting to look cheap even before the big drop last Friday is that long-term mutual funds investing in U.S. equities saw their first inflows in more than three months last week.

According to the Investment Company Institute, these funds took in $807 million in the week ended May 30 on the heels of outflows of $7.2 billion the week before. Overall, equity funds saw inflows of $1.49 billion last week, while bond funds saw outflows of $317 million and hybrid funds, investing in both, took in $460 million.

As for Thursday's scheduled news, lululemon athletica ( LULU) is slated to report its fiscal first-quarter results before the opening bell. The average estimate of analysts polled by Thomson Reuters is for a profit of 30 cents a share in the three months ended in April on revenue of $270.9 million.

Shares of the Canadian athletic apparel maker and specialty retailer are up more 45% so far in 2012 but as of Wednesday's close at $70.02, they've pulled back nearly 14% since hitting a 52-week high of $81.09 on May 2. With a forward price-to-earnings multiple north of 30X, the stock is expensive in comparison to the broad market but it's right in line with a competitor like Under Armour ( UA).

Upside earnings surprises have been standard for lululemon for a while now, although last quarter's 4%-plus beat was much smaller than an average surprise of more than 20% for the previous seven quarters.

After growing revenue by 40% in fiscal 2011 to $1 billion, the company forecast revenue of $1.3 billion to $1.325 billion for the current year and earnings of $1.50 to $1.57 a share. For the first quarter, its outlook is for earnings of 28 to 29 cents a share on revenue of $265 million to $270 million.

The sell side has its share of skeptics about further appreciation from here with 13 of the 24 analysts covering lululemon at either sell (11) or hold (2). The 12-month median price target sits at $83.

Auriga USA previewed the quarter on Tuesday, reiterating a buy rating and $86 target. The firm is expecting a "strong Q1 print" from the company, saying: "We believe current merchandise at LULU is compelling and the consumer continues to respond positively."

While it sees strong comparable sales growth of 24% for the quarter, Auriga expects EBIT earnings before interest, depreciation and taxes margins to decline to 24.9% from 27.7% last year because of increased input costs. The firm believes warm weather in the February-March timeframe likely boosted sales this past quarter and sees a focus on improving technology as one of company's greatest strengths.

"Investments in 2012 include new techniques in garment construction, new fabric technology and finishing," Auriga said. "Technical product innovation remains LULU's focus to drive increased productivity in stores and online. Supply chain investments include increasing the flow of product to stores and to localize product for different regions (more outerwear for colder climates)."

Check out TheStreet's quote page for lululemon for year-to-date share performance, analyst ratings, earnings estimates and much more.

Other companies reporting their quarterly results on Thursday include Altera ( ALTR), Benihana ( BNHN), Comverse Technology ( CMVT), Isle of Capri Casinos ( ISLE), J.M. Smucker ( SJM), NaviStar ( NAV), and Uti Worldwide ( UTIW).

The economic calendar features weekly initial and continuing jobless claims at 8:30 a.m. ET; and consumer credit for April at 3 p.m. ET.

And finally, Men's Wearhouse ( MW) was the big loser in late trades after the specialty retailer fell short in its latest quarter and gave a weak outlook.

The Houston-based company, which sells suits and related apparel and rents tuxedos, forecast earnings of $2.70 to $2.78 a share for the full year, below the current average estimate of analysts polled by Thomson Reuters for a profit of $2.80 a share. For the second quarter ending in July, Men's Wearhouse sees earnings of $1.12 to $1.13 a share vs. the current consensus view of $1.22 a share.

The stock was last quoted at $28.99, down 18.5%, on volume of more than 1 million, according to Nasdaq.com.

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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