The Most Important Chart Pt.2

This past week was the November art sale week for all of the auction houses in New York. I got the chance to attend Sotheby’s evening auction on Thursday through work, where I actually saw Dan Loeb in attendance. Pretty cool.

While I was there it dawned on me to check out Sotheby’s stock to see how they are doing. I am sure its safe to say that times are good for Sotheby’s when the overall stock market is rising. I don’t believe their customer base is the average person as he or she won’t be buying a $30 million dollar painting for fun.

It only took a few seconds to come across an interesting observation.

First, here is Sotheby’s stock chart:
Screen Shot 2016-11-20 at 2.27.19 PM.png

Pretty volatile and a lack of trend in my opinion, but what I see is a crash in their stock before the general market in the 2000 tech bubble and the 2007 credit crisis. BID last peaked in 2013 and has been making lower highs as the U.S. indices have traded sideways since 2015. Note: 14 day RSI is close to breaking out.

When I overlay BID and SPX on the same chart, here is what you get:
Screen Shot 2016-11-20 at 2.38.28 PM.png

Notice how Sotheby’s rolls over before the S&P500 in the previous too crashes. The S&P has fought off this correlation for 2 years now. If Sotheby’s breaks out here, what kind of sign could that be for the overall market?

I’ll be watching this one closely. Thanks.

—————————————
Update 8/1/2017

Well its been about 7 months since this post. Where do we stand today? Sotheby’s is nearing all time highs, up ~40% since November, and looks like it wants to break out of this base going back to 2006.

bid.png

A fresh look at these two together has shown the correlation I was looking for and the S&P is up ~17% since November.

bidspy.png

Lets watch what happens up here. Continued positive price action in Sotheby’s bodes well for the market IMO.

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