market-top-detector

name	market-top-detector
description	Use when assessing whether the broad market is forming a top, evaluating distribution day counts, leadership breakdown, defensive rotation, or deciding whether to reduce equity exposure.

Market Top Detector

Overview

Scores the probability of a market top forming using a 6-component framework (0–100). Combines O'Neil distribution day tracking, Minervini leading-stock deterioration patterns, and defensive sector rotation signals. Targets 2–8 week tactical timing signals that precede 10–20% corrections. Pulls live signals from our CLI where available and supplements with analyst-sourced data.

Output: A score from 0–100 mapped to a risk zone, with a recommended action and position-size budget.

When to Use

• User asks "is the market topping?" or "should I reduce exposure?"
• Distribution days are accumulating on major indices
• Leading stocks are breaking down while indices hold up
• Defensive sectors (utilities, staples, healthcare) are outperforming
• User wants a systematic framework before making a large position reduction

CLI Integration

# Aggregate signal check across key tickers
trader strategies signals --tickers SPY,QQQ,IWM --strategy rsi
trader strategies signals --tickers SPY,QQQ,IWM --strategy macd

# Leading stock health — check top holdings for deterioration
trader strategies signals --tickers NVDA,AAPL,MSFT,AMZN,META --strategy ma_cross

# Defensive rotation check — compare sector ETF signals
trader strategies signals --tickers XLU,XLP,XLV,XLK,XLY --strategy rsi

# News sentiment on macro / market
trader news sentiment SPY --lookback 7d
trader news latest --tickers SPY --limit 20

# Portfolio P&L health
trader positions pnl
trader positions list

Scoring Framework

Score each component and sum weighted scores. Final score = 0–100.

Component 1 — Distribution Day Count (25 pts max)

Count distribution days on SPY/QQQ in the past 25 sessions (down ≥0.2% on higher volume than prior day).

Count	Points
0–2	0
3–4	10
5–6	18
7+	25

Component 2 — Leading Stock Health (20 pts max)

Use trader strategies signals --tickers <leaders> --strategy ma_cross and count how many are below their 50-day MA or showing MACD bearish crosses.

Leaders broken	Points
<20%	0
20–39%	8
40–59%	14
60%+	20

Component 3 — Defensive Sector Rotation (15 pts max)

Compare XLU/XLP/XLV RSI signals vs XLK/XLY. Defensive outperformance is bearish.

trader strategies signals --tickers XLU,XLP,XLV,XLK,XLY --strategy rsi

Signal	Points
Cyclicals leading	0
Mixed / neutral	5
Defensives clearly outperforming	15

Component 4 — Market Breadth Divergence (15 pts max)

Index at/near high but advance-decline line declining, or fewer stocks making new 52-week highs. Supplement with WebSearch for NYSE A/D line data.

Breadth	Points
Confirming highs	0
Mild divergence	7
Strong divergence	15

Component 5 — Index Technical Condition (15 pts max)

trader strategies signals --tickers SPY,QQQ --strategy macd
trader strategies run SPY --strategy rsi --lookback 90d

Condition	Points
SPY above 50MA, RSI 50–70, MACD bullish	0
SPY near 50MA or RSI >75	7
SPY below 50MA or RSI diverging	15

Component 6 — Sentiment & Speculation (10 pts max)

Use trader news sentiment SPY --lookback 7d plus check VIX level and put/call ratio (WebSearch if needed).

Condition	Points
VIX low, sentiment neutral-bearish	0
Euphoric sentiment, IPO frenzy	5
Extreme greed, VIX <13, put/call <0.7	10

Risk Zones

Score	Zone	Action	Max equity exposure
0–20	Green — No signal	Normal trading	100%
21–40	Yellow — Early caution	Tighten stops, no new laggards	80%
41–60	Orange — Elevated risk	Trim weakest positions, raise cash	60%
61–80	Red — High risk	Significant reduction, hedges	40%
81–100	Critical — Top likely	Mostly cash/short, protect capital	20%

Workflow

1. Run CLI signals — Execute the commands in CLI Integration above. Note bullish/bearish readings per component.
2. Gather supplemental data — Use WebSearch for NYSE A/D line, VIX term structure, put/call ratio if not in news output.
3. Score each component — Use tables above. Document evidence for each score.
4. Sum and map to risk zone — Report final score, zone, recommended action.
5. Cross-check with positions — Run trader positions list and trader positions pnl. If heavily long into a Red/Critical reading, suggest specific trims via trader positions close or trader orders stop.

Output Format

Market Top Score: 67 / 100  →  RED ZONE

Component breakdown:
  Distribution Days (25):     18  — 6 days on SPY in 25 sessions
  Leading Stock Health (20):  14  — 45% of leaders below 50MA
  Defensive Rotation (15):     5  — mild defensive outperformance
  Breadth Divergence (15):    15  — A/D line diverging
  Index Technicals (15):       7  — SPY testing 50MA
  Sentiment (10):              8  — VIX 12.8, put/call 0.68

Recommendation: Reduce to 40% equity exposure.
Suggested actions:
  trader orders stop NVDA --price 118.00
  trader positions close LAGGARD_TICKER

Common Mistakes

• Scoring on index price alone — The index can be flat while internals rot. Always check breadth and leadership separately.
• Skipping CLI signals — Don't estimate — run trader strategies signals before scoring components 2 and 5.
• Reacting to a single distribution day — One bad day isn't a top. Pattern requires 5+ days in 25 sessions.
• Ignoring the trend of the score — A score moving from 30 → 55 over two weeks is more actionable than a static 55.
• Treating Critical as a short signal — This skill signals risk reduction, not shorting. Avoid adding leveraged short positions without additional edge.