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In case you haven't heard, the stock market fell a little bit over the past few weeks. Okay, you got me, that was an understatement.

What actually happened was that the Dow took a 15% haircut after it topped on July 21st, though "haircut" may be the wrong word to use here. This is more like a decapitation. It has certainly got the suits at Wall Street running around like they lost their heads. The $1 million question that's on everyone's mind right now is this: Is this market crash justified? If it is, if the economy really is teetering on the brink of a double dip recession like all the doomsayers are predicting, then it's time to pack your bags and blow out of Dodge. If it isn't, and if this is just another case of fear and panic on the Street feeding in on itself and getting fat, then it's time to whip out your wallet and go bargain shopping.

Peter Lynch taught us to always focus on the big picture and not get mired down by the day-to-day doom and gloom that's splashed all over the news feeds whenever market sentiment turns bearish. So to put this chaos into some perspective, let's take a look at some of the most important economic indicators published over the past month to see if this correction presents a trap or an opportunity.

July Economic Indicators

  • Same store sales for the country's biggest retailers up +4.4%, in line with analyst estimates.
  • Non-farm payrolls up +117K, 37% above market expectations.
  • The ISM Purchasing Managers Index fell to 50.9%, below analyst expectations of 54.8%.
  • The Consumer Confidence Index up to 59.5, versus market expectations of a drop to 56.0.
  • Corporations posted record earnings across the board during second quarter earnings season, with over 70% beating analyst estimates.
  • Insider purchases at the highest level since the March 2009 bottom, with over $400 million in company shares bought since the beginning of July.

If there's another recession hiding in the bush waiting to ambush the unwary investor, I'm not seeing it. Sure, the bickering between our government officials over the whole debt ceiling issue didn't exactly do much to inspire confidence in this country's leadership. And sure, the S&P's downgrade of the U.S. government's triple-A credit rating was a major symbolic failure. But in the end, how much is all this going to affect the bottom lines of the companies we're invested in? When it comes down to the wire, profit is all that matters. Honestly, I think this whole shebang is just another political panic, and it will blow over when everyone realizes that U.S. companies are raking in more dough than they've ever had before.

The Fed certainly doesn't seem to care about all the fuss going on in the stock market. Wall Street was waiting for its official statement with bated breath all Tuesday, and the one it eventually posted didn't tell us anything we didn't already know. No mention of QE3. Interest rates are going to remain low for some time. The economy kind of stinks right now. Gee, thanks Mr. Bernanke. The most important thing contained in the Fed's press release was that there were no important things. Clearly Bernanke and his crew don't believe the market crash to be anything worth losing sleep over, because it has no underlying economic justification. I think they're right on this one.

In the meantime, the SPDR index fund (NYSEARCA:SPY) is sitting at just 11x forward earnings. Companies with massive cash hoards like Cisco (NASDAQ:CSCO) and Microsoft (NASDAQ:MSFT) are trading at multiples of 10 and 9. Consumer staples that are usually safe harbors for investors in a recession like Johnson & Johnson (NYSE:JNJ) and Wal-Mart (NYSE:WMT) are selling for 14x and 10x earnings, respectively. It doesn't end there, there's something for everyone in this blow-out clearance sale. Growth investors can pick up Sirius XM (NASDAQ:SIRI) for a discount of almost 30% off its high. Like banks? Snatch up Bank of America (NYSE:BAC) at a third of its book value. Make sure to get some for your wife and kids, too. But act quickly, because this is a limited time offer.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Is the Market Tumble Really the Prelude to a Second Recession?