us-market-bubble-detector

Evaluates market bubble risk through quantitative data-driven analysis using the revised Minsky/Kindleberger framework v2.1. Prioritizes objective metrics (Put/Call, VIX, margin debt, breadth, IPO data) over subjective impressions. Features strict qualitative adjustment criteria with confirmation bias prevention. Supports practical investment decisions with mandatory data collection and mechanical scoring. Use when user asks about bubble risk, valuation concerns, or profit-taking timing.

# US Market Bubble Detection Skill (Revised v2.1)

## Key Revisions in v2.1

**Critical Changes from v2.0:**
1. ✅ **Mandatory Quantitative Data Collection** - Use measured values, not impressions or speculation
2. ✅ **Clear Threshold Settings** - Specific numerical criteria for each indicator
3. ✅ **Two-Phase Evaluation Process** - Quantitative evaluation → Qualitative adjustment (strict order)
4. ✅ **Stricter Qualitative Criteria** - Max +3 points (reduced from +5), requires measurable evidence
5. ✅ **Confirmation Bias Prevention** - Explicit checklist to avoid over-scoring
6. ✅ **Granular Risk Phases** - Added "Elevated Risk" phase (8-9 points) for nuanced risk management

---

## When to Use This Skill

Use this skill when:

**English:**
- User asks "Is the market in a bubble?" or "Are we in a bubble?"
- User seeks advice on profit-taking, new entry timing, or short-selling decisions
- User reports social phenomena (non-investors entering, media frenzy, IPO flood)
- User mentions narratives like "this time is different" or "revolutionary technology" becoming mainstream
- User consults about risk management for existing positions

**Japanese:**
- ユーザーが「今の相場はバブルか?」と尋ねる
- 投資の利確・新規参入・空売りのタイミング判断を求める
- 社会現象(非投資家の参入、メディア過熱、IPO氾濫)を観察し懸念を表明
- 「今回は違う」「革命的技術」などの物語が主流化している状況を報告
- 保有ポジションのリスク管理方法を相談

---

## Evaluation Process (Strict Order)

### Phase 1: Mandatory Quantitative Data Collection

**CRITICAL: Always collect the following data before starting evaluation**

#### 1.1 Market Structure Data (Highest Priority)
```
□ Put/Call Ratio (CBOE Equity P/C)
  - Source: CBOE DataShop or web_search "CBOE put call ratio"
  - Collect: 5-day moving average

□ VIX (Fear Index)
  - Source: Yahoo Finance ^VIX or web_search "VIX current"
  - Collect: Current value + percentile over past 3 months

□ Volatility Indicators
  - 21-day realized volatility
  - Historical position of VIX (determine if in bottom 10th percentile)
```

#### 1.2 Leverage & Positioning Data
```
□ FINRA Margin Debt Balance
  - Source: web_search "FINRA margin debt latest"
  - Collect: Latest month + Year-over-Year % change

□ Breadth (Market Participation)
  - % of S&P 500 stocks above 50-day MA
  - Source: web_search "S&P 500 breadth 50 day moving average"
```

#### 1.3 IPO & New Issuance Data
```
□ IPO Count & First-Day Performance
  - Source: Renaissance Capital IPO or web_search "IPO market 2025"
  - Collect: Quarterly count + median first-day return
```

**⚠️ CRITICAL: Do NOT proceed with evaluation without Phase 1 data collection**

---

### Phase 2: Quantitative Evaluation (Quantitative Scoring)

Score mechanically based on collected data using the following criteria:

#### Indicator 1: Put/Call Ratio (Market Sentiment)
```
Scoring Criteria:
- 2 points: P/C < 0.70 (excessive optimism, call-heavy)
- 1 point: P/C 0.70-0.85 (slightly optimistic)
- 0 points: P/C > 0.85 (healthy caution)

Rationale: P/C < 0.7 is historically characteristic of bubble periods
```

#### Indicator 2: Volatility Suppression + New Highs
```
Scoring Criteria:
- 2 points: VIX < 12 AND major index within 5% of 52-week high
- 1 point: VIX 12-15 AND near highs
- 0 points: VIX > 15 OR more than 10% from highs

Rationale: Extreme low volatility + highs indicates excessive complacency
```

#### Indicator 3: Leverage (Margin Debt Balance)
```
Scoring Criteria:
- 2 points: YoY +20% or more AND all-time high
- 1 point: YoY +10-20%
- 0 points: YoY +10% or less OR negative

Rationale: Rapid leverage increase is a bubble precursor
```

#### Indicator 4: IPO Market Overheating
```
Scoring Criteria:
- 2 points: Quarterly IPO count > 2x 5-year average AND median first-day return +20%+
- 1 point: Quarterly IPO count > 1.5x 5-year average
- 0 points: Normal levels

Rationale: Poor-quality IPO flood is characteristic of late-stage bubbles
```

#### Indicator 5: Breadth Anomaly (Narrow Leadership)
```
Scoring Criteria:
- 2 points: New high AND < 45% of stocks above 50DMA (narrow leadership)
- 1 point: 45-60% above 50DMA (somewhat narrow)
- 0 points: > 60% above 50DMA (healthy breadth)

Rationale: Rally driven by few stocks is fragile
```

#### Indicator 6: Price Acceleration
```
Scoring Criteria:
- 2 points: Past 3-month return exceeds 95th percentile of past 10 years
- 1 point: Past 3-month return in 85-95th percentile of past 10 years
- 0 points: Below 85th percentile

Rationale: Rapid price acceleration is unsustainable
```

---

### Phase 3: Qualitative Adjustment (REVISED v2.1)

**Limit: +3 points maximum (REDUCED from +5 in v2.0)**

**⚠️ CONFIRMATION BIAS PREVENTION CHECKLIST:**
```
Before adding ANY qualitative points:
□ Do I have concrete, measurable data? (not impressions)
□ Would an independent observer reach the same conclusion?
□ Am I avoiding double-counting with Phase 2 scores?
□ Have I documented specific evidence with sources?
```

#### Adjustment A: Social Penetration (0-1 points, STRICT CRITERIA)
```
+1 point: ALL THREE criteria must be met:
  ✓ Direct user report of non-investor recommendations
  ✓ Specific examples with names/dates/conversations
  ✓ Multiple independent sources (minimum 3)

+0 points: Any criteria missing

⚠️ INVALID EXAMPLES:
- "AI narrative is prevalent" (unmeasurable)
- "I saw articles about retail investors" (not direct report)
- "Everyone is talking about stocks" (vague, unverified)

✅ VALID EXAMPLE:
"My barber asked about NVDA (Nov 1), dentist mentioned AI stocks (Nov 2),
Uber driver discussed crypto (Nov 3)"
```

#### Adjustment B: Media/Search Trends (0-1 points, REQUIRES MEASUREMENT)
```
+1 point: BOTH criteria must be met:
  ✓ Google Trends showing 5x+ YoY increase (measured)
  ✓ Mainstream coverage confirmed (Time covers, TV specials with dates)

+0 points: Search trends <5x OR no mainstream coverage

⚠️ CRITICAL: "Elevated narrative" without data = +0 points

HOW TO VERIFY:
1. Search "[topic] Google Trends 2025" and document numbers
2. Search "[topic] Time magazine cover" for specific dates
3. Search "[topic] CNBC special" for episode confirmation

✅ VALID EXAMPLE:
"Google Trends: 'AI stocks' at 780 (baseline 150 = 5.2x).
Time cover 'AI Revolution' (Oct 15, 2025).
CNBC 'AI Investment Special' (3 episodes Oct 2025)."

⚠️ INVALID EXAMPLE:
"AI/technology narrative seems elevated" (unmeasurable)
```

#### Adjustment C: Valuation Disconnect (0-1 points, AVOID DOUBLE-COUNTING)
```
+1 point: ALL criteria must be met:
  ✓ P/E >25 (if NOT already counted in Phase 2 quantitative)
  ✓ Fundamentals explicitly ignored in mainstream discourse
  ✓ "This time is different" documented in major media

+0 points: P/E <25 OR fundamentals support valuations

⚠️ SELF-CHECK QUESTIONS (if ANY is YES, score = 0):
- Is P/E already in Phase 2 quantitative scoring?
- Do companies have real earnings supporting valuations?
- Is the narrative backed by fundamental improvements?

✅ VALID EXAMPLE for +1:
"S&P P/E = 35x (vs historical 18x).
CNBC article: 'Earnings don't matter in AI era' (Oct 2025).
Bloomberg: 'Traditional metrics obsolete' (Nov 2025)."

⚠️ INVALID EXAMPLE:
"P/E 30.8 but companies have real earnings and AI has fundamental backing"
(fundamentals support = +0 points)
```

**Phase 3 Total: Maximum +3 points**

---

### Phase 4: Final Judgment (REVISED v2.1)

```
Final Score = Phase 2 Total (0-12 points) + Phase 3 Adjustment (0 to +3 points)
Range: 0 to 15 points

Judgment Criteria (with Risk Budget):
- 0-4 points: Normal (Risk Budget: 100%)
- 5-7 points: Caution (Risk Budget: 70-80%)
- 8-9 points: Elevated Risk (Risk Budget: 50-70%) ⚠️ NEW in v2.1
- 10-12 points: Euphoria (Risk Budget: 40-50%)
- 13-15 points: Critical (Risk Budget: 20-30%)
```

**Key Change in v2.1:**
- Added "Elevated Risk" phase (8-9 points) for more nuanced positioning
- 9 points is no longer extreme defensive zone (was 40% risk budget)
- Now allows 50-70% risk budget at 8-9 point level
- More gradual transition from Caution to Euphoria phases

---

## Data Sources (Required)

### US Market
- **Put/Call**: https://www.cboe.com/tradable_pro