There's a Big Bad Bear on the cover of the latest BusinessWeek magazine, which some on Wall Street believe is a sign to buy stocks.

The idea may sound irrelevant as the market plumbs new depths by the day. But contrarian pundits, judging by a so-called "Magazine Cover Indicator," argue the time is nearing for the fast-sinking stock market to reach bottom as shares fall to their lowest level in five years.

That's because BusinessWeek in 1979 ran a now-legendary cover with the title, "The Death of Equities," lamenting the sorry state on Wall Street after a decade of declining stock prices, including the severe 1973-74 bear market. That cover preceded the start of Wall Street's longest running bull market that began in 1982.

The cover of BusinessWeek's July 29 issue, which some subscribers received on Friday, features a ferocious grizzly and the McGraw-Hill Cos. magazine describes Wall Street's woes.

When more mainstream publications catch wind of the ill times on Wall Street, it would probably be a good time to jump into the market with both feet, argue the pundits.

"I just opened my copy of BusinessWeek, THE ANGRY MARKET," said Alan Ackerman, strategist at Fahnestock & Co, reading aloud the capitalized words superimposed on the grizzly's picture. "There appear to be more bears on Wall Street than in Yellowstone Park."

"The frequency of magazine covers featuring bears may in fact signal nearing the bottom of this downdraft market," he said. "Many use magazine covers as a contrarian index."

DEATH OF EQUITIES

The 1979 BusinessWeek magazine cover preceded the greatest bull market in the history of financial markets, as the blue-chip Dow Jones industrial average went from below 1,000 points then to a high above 11,722 by January 2000, before the implosion of the equities bubble in the last two years.

This time, the cover came as the Dow lost 7.8 percent for the week, finishing at 8,019.

"From a contrarian perspective, this is a positive sign because popular media often simply reflect the current mood of the consensus," Banc of America Securities' strategist Tom McManus told clients in a note.

"Look closely to see if you can find a bear pictured on the cover of a 'mainstream media' magazine like Time or Newsweek .. that would be even more significant," he wrote.

McManus told Reuters, "If there's a bear on the cover of People, buy with both hands."

BusinessWeek's editors are aware of how famous their cover has become but said they saw little link between a bear on the cover and a market rebound.

"There's not much question that we are in a grizzly bear market, but we did not have this cover to signal a rebound," Mark Morrison, BusinessWeek's managing director, told Reuters. "There are always people on Wall Street that use magazine covers as big contrarian indicators, but I don't think they work that way."

The current bear market, which began after stocks hit a high in March 2000, has been the most severe in a generation. The news of the equities rout has indeed moved in recent weeks to the front page of major newspapers.

"The public has lost faith in market, but I'm getting more bullish," Will Muggia, manager of the Touchstone Emerging Growth Fund, said.

"There have been 7 weeks in a row of equity mutual fund redemptions, which is a sign of capitulation selling. Historically, massive redemptions have been a contrarian signal."

McManus pointed to another contrarian gauge. According to Investor's Intelligence, bearish investment newsletter writers now outnumber the bulls for the first time since September.

Fahnestock's Ackerman, a veteran of several bear markets, pointed to the content of media publications as another indicator of a looming bottom for stocks.

"There was a story in the Wall Street Journal about individual investors learning how to short the market," said Ackerman, referring to the practice of selling borrowed shares in the hopes of pocketing a profit by buying them later at a lower price.

"Individual investors account for only 2 percent of all short positions, so this may be a sign that we are getting near the end," Ackerman told Reuters.