Back on March 2nd, I made a video in this post about using high end auction house Sotheby’s as a broad market indicator.
Looking at the monthly chart, below, you can see that each prior bear market (for the broad market) we have seen over the past three decades has been accompanied by a parabolic move higher and subsequent crash in BID.
Of course, the most recent spike up in Sotheby’s happened in 2011, topping out that spring before the broad market suffered what was, for all intents and purposes, a summer crash–It was not a major bear market, though. But the S&P 500 did correct 21.6% from peak to trough that spring and summer (from 1370 down to 1074).
And that begs the question of whether this indicator is losing its validity, or instead is hinting that 2011 may have been a moderate bear in its own right, which means that October 2011 gave birth to the most recent bull. The bull argument, therefore, is that the current bull market is not as mature as it may seem, since it started in the fall of 2011 instead of March 2009. Or perhaps it is all a matter of semantics.
However, returning to the BID chart, you can clearly see the sideways consolation on the monthly. And I suspect where the next big directional move is will shed a significant amount of light on this debate.
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