POP

If you ask an art market savant what's driving the current boom in the market, he'll probably answer you with one or more of the following:

1. It's the hedge fund guys. They're using their millions and billions to fill their Greenwich McMansions with Hirst's conceptual turns and Warhol's candy-colored silk-screens.

2. It's new global wealth. As the economies of countries like Russia and China thrive, their nouveau riche want trophies for their walls.

3. It's the weak (weak) dollar. Apart from the international circuit of fairs, most of the action is happening in New York, and when your cash money is in, say, euros, not dollars, a Christie's catalogue looks like a bargain bin.

Our theory is that if one of these markets takes a hit, we may see the art market fall from its lofty pedestal. It's a hypothesis grounded historically: The general consensus is that the last rich and heady times for the market were driven by Japanese businessmen and that they came to an end when the Japanese real estate market crashed in 1990.

As the November auctions approach, we'll be regularly updating a feature we call "Pop." Aggregating hedge fund activity, the health of global markets, and fluctuations in the exchange rate, we'll assign the market a low risk of tanking (BLUE), a medium risk (YELLOW), a high risk (ORANGE), or an almost certain risk (RED).

Without further ado:

Stocks rose this afternoon after the Commerce Department reported that home sales were up last month by 2.8%. Well, no one saw this coming given the looming subprime crisis. On the surface, it looks like a welcome surprise. But J.P. Morgan's Haseeb Ahmed told the Wall Street Journal that the figures were "just a bit of a blip in an otherwise dire outlook." The bottom line is that we still have no idea where the subprime crisis is going, which leaves us feeling a little shaky about the health of the art market. So today we're setting the bubble burst threat level at: YELLOW.