WHAT COMES NEXT? (BID & MACRO VIEW)

Without any commentary..... what do you think comes next?

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.com/

MACRO UPDATE - Sotheby's (BID)

Over the years I've highlighted a few of the major "turning point" indicators I've watched over the course of my involvement with the equity markets.  One of those that I found years back was the relationship that has held between the overall markets and that of Sotheby's.  I guess Sotheby's is a perfect example of disposable income at its best sort of like a Tiffany's or other high end retailer.

The redish line is (BID), while I've added the SPX behind in black.  BID seems to be an early turn indicator in the last two major swoons in early 1999 and also in late 2007, I've marked those in blue.  Late in 2012 again has presented us with a major turn signal where BID certainly has fallen, yet in this Fed stimulated world.... SPX continues to fly (marked in red at the far right of the chart).

While the overall markets "should" according to this two instance example begin to turn, it might just be a safer bet to short BID and just forget about shorting the overall market.  Are we even allowed to short anything?  Tomorrow's employment report will be interesting as we've heard from the Fed that they are willing and able to pump to the moon, as labor participation rates continue to decline, unemployment figures seem to improve as well.  I'm very interested to see what happens when the unemployment trap is set and the Fed needs to restate that they didn't really mean that they would really stop stimulating when the unemployment rate actually gets in the high 6% range.

 As with everything, I'm sure we'll just have a new set of rules or a new boogey man that will require unlimited printing and liquidity-less liquidity.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

SOTHEBY'S SAYS WELCOME TO THE NEXT COLLAPSE

DOES THE AUCTION HOUSE SHOW US WHERE THE MARKETS MIGHT GO?
I've followed Sotheby's for a couple of years as it has been said that the stock has marked the tops of markets as it rolls over.

Take a look at this monthly chart for BID and you can see quite clearly that the first peak was March of 1999 which was followed by a drop of about 65% in the stock.  The second top was October of 2007 in the financial crisis which fell by 89%.  April of 2011 was the top of Sotheby's in the latest bull run and if the two previous instances can guide us at all we might see a drop to the 20 level.  We'll dub this latest collapse "THE LEADERSHIP CRISIS".

IS IT TOO LATE?
Now you may say, "Goat, that is great, you put this post up after a 20% drop from the high in the overall markets, how can this help?"  Well, my answer is simply this, that these top marks are confirmation that we need to wait for a bottoming in BID to turn bullish on the market again.

In all of these previous times, BID topped out first and fell hard.  I've used SPY in comparison and we find that each peak to trough was a fall of at least 50%.  If we see that same sort of fall over the next weeks or months or a year, this indicator could have us on the look out for a 680 SPY level as a bottom target (137 was top of this last run for SPY).

Just thought you'd find this interesting.

TRADING
Just an update.  I personally did not add any long positions today related to the post of adding more gold, commodities, or dividend players.  I did try to go long some SPY calls and was immediately stopped out.  Just another reminder not to get too cute when a bear freight train is flying down the tracks.  That small trade cost me little, but reinforced to me how it is not worth trying to catch the exact bottom, patience will be rewarded.  Having said that, the BID chart suggests that the real bottom my be way down the road.

GOATMUG   

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com