Us Market Bubble Detector

Key Revisions in v2.1

Critical Changes from v2.0: ✅ Mandatory Quantitative Data Collection - Use measured values, not impressions or speculation ✅ Clear Threshold Settings - Specific numerical criteria for each indicator ✅ Two-Phase Evaluation Process - Quantitative evaluation → Qualitative adjustment (strict order) ✅ Stricter Qualitative Criteria - Max +3 points (reduced from +5), requires measurable evidence ✅ Confirmation Bias Prevention - Explicit checklist to avoid over-scoring ✅ 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

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

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?

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.

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

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

Evaluation Report Structure (v2.1)

• # [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

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_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: Confirmation Bias Prevention: Explicit checklist before adding qualitative points Measurable Evidence Required: No points without concrete data (Google Trends, media coverage) Double-Counting Prevention: Valuation must not duplicate Phase 2 quantitative Granular Risk Phases: Added "Elevated Risk" (8-9 points) for nuanced positioning 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.