This weekend, the Wall Street Journal's "Breaking Views" column advised readers that they should watch Sotheby's (BID) stock "as a market barometer for both art and equities". The article pointed out that prior declines in equity markets have been preceded by a downturn in BID's stock. Since the article never showed a chart of the two in order to let readers see the relationship between them, we checked for ourselves.
As the long-term chart shows, while BID showed no early signal prior to the Fall 1998 declines, the stock had shown declines of over 50% from its previous peaks when the S&P 500 peaked in 1990 and 2000. As a signal that a bear market is ending however, trading in BID is more coincidental. In 1990, 1994, and 2002, both the S&P 500 and BID bottomed at about the same time.