Sotheby’s “Bubble Indicator” update

In the past, I have posted about the correlation between Sotheby’s and the broader equity indexes.  Sotheby’s (BID) has proven to be a pretty decent bubble indicator, dating back to the late 80’s, as marked by this chart originally posted (in 2011) on Zero Hedge.

BID may be flashing a warning sign once again.  In 2011, it broke down from the mid-40’s and dropped over 40% before finding a bottom in the 20’s.  It has broken down again, from the same level as in 2011.  In the below chart, 2011 is the middle breakdown.

2014-05-06-BID-LT_CHARTS

Below is a closer look at the current breakdown.  In fact, my chart from 2011 looks almost identical the one below.  Last time, the price fell a good bit further.  We’ll see how it shakes out this time.

2014-05-06-BID_CHARTS

 

We can see how a breakdown in BID might correlate to other markets, like Nasdaq (QQQ).  It looks like QQQ may be putting the finishing touches on the right shoulder of a large head and shoulders pattern.  That pattern sure is conducive to a major market top.

2014-05-06-QQQ-headandshoulders_CHARTS

 

Only time will tell if it was a useful warning or a false alarm this time around.

 

 

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