The Calm Before the Stock Market Storm

After last week’s powerful rally and before this week’s pivotal central bank meetings, we are in the eye of the storm.

Last week brought a dramatic rally during the last two trading days and yesterday was quiet as important central bank meetings and economic data approach.

The calm will likely not last as important news and decisions rapidly approach.

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Yesterday was a very low volume day that resulted in small losses after choppy action all day.

The Federal Reserve meets Tuesday and Wednesday with its announcement coming Wednesday, while on Thursday Mario Draghi and his European Central Bank to deal with the ongoing European debt crisis.

Earnings season continued with overall weaker sales and earnings and this week will bring important data points on Friday with the Monthly Non Farm Payrolls and Unemployment reports.

For the day, the Dow Jones Industrial Average (NYSEARCA:DIA) was mostly flat with a decline of -0.02% while the S&P 500 (NYSEARCA:SPY) declined a shallow -0.05%.  The Nasdaq 100 (NYSEARCA:QQQ) fell 0.91% and the Russell 2000 Index (NYSEARCA:IWM) of small cap stocks led the way lower with a loss of 0.55%.

It was a low volume day with about even numbers of advancing stocks versus declining issues.

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Treasury Secretary Timothy Geithner met with German Finance Minister Wolfgang Schauble and had nothing new to say as they promised more cooperation in resolving the European debt crisis and Geithner was scheduled to meet with Mario Draghi in the evening.

AIG (NYSE:AIG) and  General Motors (NYSE:GM) announce earnings on Thursday, August 2nd, while Proctor & Gamble (NYSE:PG) reports earnings on Friday, August 3rd.

Bottom line: Global investors are desperate for central bank action, both at home and in Europe, in response to the slowing global economy and ongoing European debt crisis.  This week’s meetings will be pivotal in charting the course ahead.

John Nyaradi is the author of The ETF Investing Premium Newsletter.

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