Healing is a matter of time, but it is sometimes a matter of opportunity, the father of medicine, Hippocrates, wrote.

As far as the stock market goes, Hippocrates and Standard & Poor’s chief investment strategist, Sam Stovall, are pretty much on the same wavelength. Moreover, Mr. Stovall offers solid evidence to back up his case that time heals all wounds when it comes to market thrashings. His argument is especially relevant now, given the market’s bashing between mid-July and mid-August, a period in which the stock market dropped 10% and was stripped of $2.2 trillion in value.

In other words, based on historical data, yesterday’s market trends point to a brighter tomorrow. Mr. Stovall argues that last month’s tumble is apt to be followed by a robust recovery that should drive stock prices significantly higher than they were before the market got conked with a steady flow of triple-digit Dow declines.

The facts he serves up speak for themselves. Since 1970, there have been 12 declines of 10% or more, with the average loss running about 14%. Following those declines, it took stocks an average of 107 days to break even, after which the market averaged an 11% gain.

Applying these numbers to the present, would suggest the next step for the S&P 500, which closed Friday at 1,479.37, is a break-even rise to the mid-July high of around 1,553, followed by a further jump to 1,724, or roughly a 16% leap from current levels.

To Mr. Stovall, the clear message is “Don’t sweat the pullbacks, don’t panic in the face of big declines; it pays to have a long-term stock orientation.”

Ignoring historical data, where does he think the market is headed? His outlook calls for the S&P 500 to close the year at 1,510, about a 6.5% increase from the beginning of the year and a 2% gain from current levels. In any event, he said he would be very surprised to see a retesting of the August 15 low in the S&P 500 of 1,406.

Why is he so bullish? “Because the recent selling was overdone on the downside, economic fundamentals remain strong, and earnings forecasts by the S&P analysts are encouraging,” he replied. He expects gross domestic product to grow 2% this year and 3% next year, with earnings up 8% this year and 12% in 2008.

Another major plus is Mr. Stovall’s belief that there’s a 90% likelihood that the Federal Reserve will lower the federal funds rate on or before the September 18 meeting of its Federal Open Market Committee. History, he points out, shows the market does very well after the initial Fed rate cut, with the S&P 500 since World War II averaging a gain of 12.3% six months after the reduction and an 18.8% rise 12 months out.

Suppose he’s wrong, and the Fed doesn’t lower rates? “That would be very disheartening,” he said. (Some traders believe the lack of such action, which would fly in the face of widespread Wall Street expectations, would cause the Dow to sustain an immediate decline of between 200 and 300 points, as it would trigger widespread recession jitters.)

Among Mr. Stovall’s favorite stocks, all recent S&P upgrades based on valuation, are Burger King, Frontline, Sempra Energy, Smart Modular, and Ann Taylor Stores.

The bullish scenario sounds cheerful, but as our bull points out, it’s no slam dunk. Why not? “Because, we could see more shoes drop because of the liquidity crisis and there’s the possibility of more negative statements from companies saddled with financial difficulties,” he said.

His bottom line message, though, is clear: The healing process is under way, and the limping market mouse could turn into a tiger.

dandordan@aol.com