Pulling the $BID – when bear markets can be born

Forecasting tops in the market, the kind of tops that lead to substantial declines, even to bear markets, is no easy thing to do.

Virtually impossible, no matter how many so-called market gurus claim they have.  Most often top callers get chopped to death before they get their sell-offs, and those that appear to have succeeded in calling a top never say how painful it was trying along the way.

I am not calling a top here but I am calling attention to the fact $BID (Sothebys) may be the most important bellwether stock there is.

I don’t know if it’s because the rich quit buying expensive art, jewelry, wine and other luxury items at auction or what?  But on a simple, purely technical-analysis approach it is obvious over and over again that the stock leads when it comes to sell-offs.  There’s always a bid and ask in trading and investing and BID clearly shows when someone pulls the bid.

See the charts below. The first is a daily chart showing while the general market (SPY) has lumber up in recent days, BID has been selling off with conviction.  The second is a monthly chart showing the history of BID in relation to the market on the longer time span (that is when Bear Market can be born).  If history and the stock is to be believed this market advance is on truly dangerous ground.

Any day, any minute now the market may follow BID down.

(click on the charts for a larger view)

 

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