Stocks closed lower yesterday after flitting between positive and negative territory throughout the day.

The Dow actually made new intraday correction lows, and spent most of the day in the red. The S&P held their lows from last Thursday, but they did make a new correction low close. The Nasdaq spent most of their time in the plus column yesterday, but still finished in the red. But they too held their correction lows from last week.

From their all-time high close to yesterday's close the Dow is down -15.1%, the S&P -18.7%, and the Nasdaq by -29.1%.

The word 'recession' continues to be thrown around with some saying we may already be in one.

While GDP was down -1.4% in Q1, the Federal Reserve Bank of Atlanta's GDP Now forecast puts Q2 GDP at 2.4%.

Of course, a lot can change by the end of Q2, given that we aren't even done with May yet, and then we've got another whole month of June left. But at the moment, the recession definition of two quarters in a row of negative GDP does not appear to be in the cards just yet.

Moreover, the S&P was down by nearly -20% at its worst (as of last Thursday). By comparison, during the flash crash of 2020, at the beginning of the pandemic when everybody thought the world was coming to an end, the S&P plunged -33.9%. And due to the economic lockdown, we actually saw a real recession of 2 quarters in a row of negative GDP with Q1 down by -5.1% and Q2 down by -31.2%.

I don't think we are anywhere near anything like that.

And for further perspective, last quarter's Q1 contraction actually showed lots of positives in the economy with consumer spending up, business investment up, residential investment up, and final sales to private domestic purchasers up. (What tanked Q1 GDP numbers was lower government spending, lower exports, and lower inventories, as businesses built up supplies very slowly, in spite of surging demand.)

Nonetheless, the market is clearly uneasy right now with the current state of inflation, and how high interest rates may have to go to knock it down.

The market has not yet priced in the worst case scenario. But the S&P's testing of the -20% level and bear market territory shows plenty of traders are expecting that. Then again, that level continues to be defended, so there appears to be more people out there not ready to go there just yet.

But each day the market is making a decision. We will see what it decides today.

Either way, whether the lows are already in, or whether they have yet to be seen, there's plenty of positives in the economy right now.

And with the sell-off already pushing valuations to the lowest level in more than 2 years (April 2020), each tick lower only makes stocks look like even bigger bargains.

But let's see if the market can hold their lows again today.

Best,