---
name: us-market-bubble-detector
description: Evaluates US market bubble risk through quantitative data analysis using the Minsky/Kindleberger framework, scoring indicators like Put/Call ratio, VIX, margin debt, breadth, and IPO data.
---

# 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_products/vix/
- **VIX**: Yahoo Finance (^VIX) or https://www.cboe.com/
- **Margin Debt**: https://www.finra.org/investors/learn-to-invest/advanced-investing/margin-statistics
- **Breadth**: https://www.barchart.com/stocks/indices/sp/sp500?viewName=advanced
- **IPO**: https://www.renaissancecapital.com/IPO-Center/Stats

### Japanese Market
- **Nikkei Futures P/C**: https://www.barchart.com/futures/quotes/NO*0/options
- **JNIVE**: https://www.investing.com/indices/nikkei-volatility-historical-data
- **Margin Debt**: JSF (Japan Securities Finance) Monthly Report
- **Breadth**: https://en.macromicro.me/series/31841/japan-topix-index-200ma-breadth
- **IPO**: https://www.pwc.co.uk/services/audit/insights/global-ipo-watch.html

---

## Implementation Checklist

Verify the following when using:

```
□ Have you collected all Phase 1 data?
□ Did you apply each indicator's threshold mechanically?
□ Did you keep qualitative evaluation within +5 point limit?
□ Are you NOT assigning points based on news article impressions?
□ Does your final score align with other quantitative frameworks?
```

---

## Important Principles (Revised)

### 1. Data > Impressions
Ignore "many news reports" or "experts are cautious" without quantitative data.

### 2. Strict Order: Quantitative → Qualitative
Always evaluate in this order: Phase 1 (Data Collection) → Phase 2 (Quantitative) → Phase 3 (Qualitative Adjustment).

### 3. Upper Limit on Subjective Indicators
Qualitative adjustment has a total limit of +5 points. It cannot override quantitative evaluation.

### 4. "Taxi Driver" is Symbolic
Do not readily acknowledge mass penetration without direct recommendations from non-investors.

---

## Common Failures and Solutions (Revised)

### Failure 1: Evaluating Based on News Articles
❌ "Many reports on Takaichi Trade" → Media saturation 2 points
✅ Verify Google Trends numbers → Evaluate with measured values

### Failure 2: Overreaction to Expert Comments
❌ "Warning of overheating" → Euphoria zone
✅ Judge with measured values of Put/Call, VIX, margin debt

### Failure 3: Emotional Reaction to Price Rise
❌ 4.5% rise in 1 day → Price acceleration 2 points
✅ Verify position in 10-year distribution → Objective evaluation

### Failure 4: Judgment Based on Valuation Alone
❌ P/E 17 → Valuation disconnect 2 points
✅ P/E + narrative dependence + other quantitative indicators for comprehensive judgment

---

## Recommended Actions by Bubble Stage (REVISED v2.1)

### Normal (0-4 points)
**Risk Budget: 100%**
- Continue normal investment strategy
- Set ATR 2.0× trailing stop
- Apply stair-step profit-taking rule (+20% take 25%)

**Short-Selling: Not Allowed**
- Composite conditions not met (0/7 items)

### Caution (5-7 points)
**Risk Budget: 70-80%**
- Begin partial profit-taking (20-30% reduction)
- Tighten ATR to 1.8×
- Reduce new position sizing by 50%

**Short-Selling: Not Recommended**
- Wait for clearer reversal signals

### Elevated Risk (8-9 points) ⚠️ NEW in v2.1
**Risk Budget: 50-70%**
- Increase profit-taking (30-50% reduction)
- Tighten ATR to 1.6×
- New positions: highly selective, quality only
- Begin building cash reserves for future opportunities

**Short-Selling: Consider Cautiously**
- Only after confirming at least 2/7 composite conditions
- Small exploratory positions (10-15% of normal size)
- Strict stop-loss (ATR 2.0×)

**Rationale for NEW phase:**
This zone represents heightened caution without extreme defensiveness.
Market shows warning signs but not imminent collapse.
Maintain exposure to quality positions while building flexibility.

### Euphoria (10-12 points)
**Risk Budget: 40-50%**
- Accelerate stair-step profit-taking (50-60% reduction)
- Tighten ATR to 1.5×
- No new long positions except on major pullbacks

**Short-Selling: Active Consideration**
- After confirming at least 3/7 composite conditions
- Small positions (20-25% of normal size)
- Defined risk only (options, tight stops)

### Critical (13-15 points)
**Risk Budget: 20-30%**
- Major profit-taking or full hedge implementation
- ATR 1.2× or fixed stop-loss
- Cash preservation mode - prepare for major dislocation

**Short-Selling: Recommended**
- After confirming at least 5/7 composite conditions
- Scale in with small positions, pyramid on confirmation
- Tight stop-loss (ATR 1.5× or higher)
- Consider put options for defined risk

---

## Composite Conditions for Short-Selling (7 Items)

Only consider shorts after confirming at least 3 of the following:

```
1. Weekly chart shows lower highs
2. Volume peaks out
3. Leverage indicators drop sharply (margin debt decline)
4. Media/search trends peak out
5. Weak stocks start to break down first
6. VIX surges (spike above 20)
7. Fed/policy shift signals
```

---

## Output Format

### Evaluation Report Structure (v2.1)

```markdown
# [Market Name] Bubble Evaluation Report (Revised v2.1)

## Overall Assessment
- Final Score: X/15 points (v2.1: max reduced from 16)
- Phase: [Normal/Caution/Elevated Risk/Euphoria/Critical]
- Risk Level: [Low/Medium/Medium-High/High/Extremely High]
- Evaluation Date: YYYY-MM-DD

## Quantitative Evaluation (Phase 2)

| Indicator | Measured Value | Score | Rationale |
|-----------|----------------|-------|-----------|
| Put/Call | [value] | [0-2] | [reason] |
| VIX + Highs | [value] | [0-2] | [reason] |
| Margin YoY | [value] | [0-2] | [reason] |
| IPO Heat | [value] | [0-2] | [reason] |
| Breadth | [value] | [0-2] | [reason] |
| Price Accel | [value] | [0-2] | [reason] |

**Phase 2 Total: X/12 points**

## Qualitative Adjustment (Phase 3) - STRICT CRITERIA

**⚠️ Confirmation Bias Check:**
- [ ] All qualitative points have measurable evidence
- [ ] No double-counting with Phase 2
- [ ] Independent observer would agree

### A. Social Penetration (0-1 points)
- Evidence: [REQUIRED: Direct user reports with dates/names]
- Score: [+0 or +1]
- Justification: [Must meet ALL three criteria]

### B. Media/Search Trends (0-1 points)
- Google Trends Data: [REQUIRED: Measured numbers, YoY multiplier]
- Mainstream Coverage: [REQUIRED: Specific Time covers, TV specials with dates]
- Score: [+0 or +1]
- Justification: [Must have 5x+ search AND mainstream confirmation]

### C. Valuation Disconnect (0-1 points)
- P/E Ratio: [Current value]
- Fundamental Backing: [Yes/No - if Yes, score = 0]
- Narrative Analysis: [REQUIRED: Specific media quotes ignoring fundamentals]
- Score: [+0 or +1]
- Justification: [Must show fundamentals actively ignored]

**Phase 3 Total: +X/3 points (max reduced from +5 in v2.0)**

## Recommended Actions

**Risk Budget: X%** (Phase: [Normal/Caution/Elevated Risk/Euphoria/Critical])
- [Specific action 1]
- [Specific action 2]
- [Specific action 3]

**Short-Selling: [Not Allowed/Consider Cautiously/Active/Recommended]**
- Composite conditions: X/7 met
- Minimum required: [0/2/3/5] for current phase

## Key Changes in v2.1
- Stricter qualitative criteria (max +3, down from +5)
- Added "Elevated Risk" phase for 8-9 points
- Confirmation bias prevention checklist
- All qualitative points require measurable evidence
```

---

## Reference Documents

### `references/implementation_guide.md` (English) - **RECOMMENDED FOR FIRST USE**
- Step-by-step evaluation process with mandatory data collection
- NG examples vs OK examples
- Self-check quality criteria (4 levels)
- Red flags during review
- Best practices for objective evaluation

### `references/bubble_framework.md` (Japanese)
- Detailed theoretical framework
- Explanation of Minsky/Kindleberger model
- Behavioral psychology elements

### `references/historical_cases.md` (Japanese)
- Analysis of past bubble cases
- Dotcom, Crypto, Pandemic bubbles
- Common pattern extraction

### `references/quick_reference.md` (Japanese)
### `references/quick_reference_en.md` (English)
- Daily checklist
- Emergency 3-question assessment
- Quick scoring guide
- Key data sources

### When to Load References
- **First use or need detailed guidance:** Load `implementation_guide.md`
- **Need theoretical background:** Load `bubble_framework.md`
- **Need historical context:** Load `historical_cases.md`
- **Daily operations:** Load `quick_reference.md` (Japanese) or `quick_reference_en.md` (English)

---

## Summary: Essence of v2.1 Revision

**v2.0 Problem (Identified Nov 2025):**
- Qualitative adjustment too loose (+5 max)
- "AI narrative elevated" → +1 point (no data)
- "P/E 30.8" → +1 point (double-counting with quantitative)
- **Result: 11/16 points - overly bearish without evidence**

**v2.1 Solution:**
- Qualitative adjustment stricter (+3 max)
- "AI narrative elevated" → 0 points (unmeasured)
- "P/E 30.8 but AI has fundamental backing" → 0 points (fundamentals support)
- **Result: 9/15 points - balanced, data-driven assessment**

**Key Improvements:**
1. **Confirmation Bias Prevention**: Explicit checklist before adding qualitative points
2. **Measurable Evidence Required**: No points without concrete data (Google Trends, media coverage)
3. **Double-Counting Prevention**: Valuation must not duplicate Phase 2 quantitative
4. **Granular Risk Phases**: Added "Elevated Risk" (8-9 points) for nuanced positioning
5. **Balanced Risk Budgets**: 9 points = 50-70% (not 40% extreme defensive)

**Core Principle:**
> "In God we trust; all others must bring data." - W. Edwards Deming

**2025 Lesson:**
Even data-driven frameworks can be undermined by subjective qualitative adjustments.
v2.1 requires MEASURABLE evidence for ALL qualitative points.
Independent observers must be able to verify each adjustment.

---

**Version History:**
- **v2.0** (Oct 27, 2025): Mandatory quantitative data collection
- **v2.1** (Nov 3, 2025): Stricter qualitative criteria, confirmation bias prevention, granular risk phases

**Reason for v2.1 Revision:**
Prevent over-scoring through unmeasured "narrative" assessments and double-counting.
Ensure all bubble risk evaluations are independently verifiable and free from confirmation bias.