BUY say the New York Times and Time Magazine

Wow! The cover of the latest issue of Time Magazine is above this post. Black headlines bordered by red - the colors of danger and fear. The five myths cited on the cover are in my view not myths at all - but they are what Time thinks its readers believe and it is happy to reinforce those fears. The torn dollar whose pieces shrink in size moving from left to right (the direction of time progression) symbolize the shrinking values of stocks, real estate, and the US dollar, and the shrinking purchasing power of the dollar in times of high food and oil prices.

The New York Times chimed in Saturday with a stock market story on page 1, above the fold and just to the left of the headline column. "Stocks Plunge" is a pretty emotional description of what happened Friday and of the trend since May 2.

Take a look at the daily bar chart of the S&P 500 which goes back to the start of the bull market in March 2009. Notice the the S&P is above its rising 200 day moving average (red line), a fact that warrants the presumption that the bull market is still intact. Note too that the drop from the May 2 top is comparable to several other reactions seen within this bull market. In fact the market is still above the steep trend line (green dash line) I have drawn through the March 2009 and July 2010 lows. It is also above the April 2010 top.

Finally note that while the S&P is above its rising 200 day moving average it is well below its 50 day moving average (wiggly blue line), a typical buy configuration in a bull market.

Taken together these facts all point to a market which is offering aggressive contrarians a terrific buying opportunity. I think the S&P will be much higher 6 months from now and will probably reach the 1500 level before this bull market ends.