Market Preview: Buy in July?

NEW YORK (TheStreet) -- This week will go a long way toward determining if Buy in July has any legs as a new market mantra.

After the major U.S. equity averages roared back to levels unseen since early May late last week -- rendering toothless the last two-plus months of churn -- Sell in May is looking a lot less prophetic in 2012. But a snap-back could very well be looming if the next round of stimulus the global markets are now counting on either doesn't arrive or is less aggressive than desired.

This week, of course, features the results of the Federal Reserve's latest policy meeting on Wednesday, the conclusion of European Central Bank's own confab on Thursday and the July employment report on Friday.

Much has been made of similarities between the market's swoon this summer and the pattern of the past two years. Steven Wieting, an analyst at Citigroup, offered up this commentary on Monday, positing that while stocks may be holding up better this year, the macro situation could turn out worse.

"Markets seem less worried about the routine mid-year slowing in 2012, perhaps with the insight gained from the policy and market outcomes of the past two years," he wrote. "Even so, 'rally season' might still have room to run before any late year panic over the U.S. fiscal cliff or some other source of risk aversion. Yet despite the more robust market performance thus far in 2012, the underlying pace and durability of the U.S. expansion seems at least slightly more challenged now than in the past two years."

Wieting is hopeful the July employment report could be much stronger than the current consensus view for job creation of 100,000, but that's where his optimism ends.

"We expect a 140,000 increase in non-farm employment in July, closer to the six-month average than either 1Q or 2Q extremes," he said. "But recent signs of moderating growth in consumer demand, profits and investment should raise concerns about the underlying pace beyond."

As befitting a presidential election year, Wieting sees the federal government as being front and center in how the rest of the year plays out.