breadth-chart-analyst

What this skill does

# Breadth Chart Analyst

## Overview

This skill enables specialized analysis of two complementary market breadth charts that provide strategic (medium to long-term) and tactical (short-term) market perspectives. Analyze breadth chart images to assess market health, identify trading signals based on backtested strategies, and develop positioning recommendations. All thinking and output are conducted exclusively in English.

## Core Principles

1. **Dual-Timeframe Analysis**: Combine strategic (Chart 1: 200MA Breadth) and tactical (Chart 2: Uptrend Ratio) perspectives
2. **Backtested Strategy Focus**: Apply proven systematic strategies based on historical patterns
3. **Objective Signal Identification**: Focus on clearly defined thresholds, transitions, and markers
4. **English Communication**: Conduct all analysis and generate all reports in English
5. **Actionable Recommendations**: Provide specific positioning guidance for different investor types

## Chart Types and Purposes

### Chart 1: S&P 500 Breadth Index (200-Day MA Based)

**Purpose**: Medium to long-term strategic market positioning

**Key Elements**:
- **8-Day MA (Orange Line)**: Short-term breadth trend, primary entry signal generator
- **200-Day MA (Green Line)**: Long-term breadth trend, primary exit signal generator
- **Red Dashed Line (73%)**: Average peak level - market overheating threshold
- **Blue Dashed Line (23%)**: Average 8MA trough level - extreme oversold, excellent buying opportunity
- **Triangles**:
  - Purple ▼ = 8MA troughs (buy signal when reverses)
  - Blue ▼ = 200MA troughs (major cycle lows)
  - Red ▲ = 200MA peaks (sell signal)
- **Pink Background**: Downtrend periods

**Backtested Strategy**:
- **BUY**: When 8MA reverses from a trough (especially below 23%)
- **SELL**: When 200MA forms a peak (typically near/above 73%)
- **Result**: Historically high performance, avoids bear markets

### Chart 2: US Stock Market - Uptrend Stock Ratio

**Purpose**: Short-term tactical timing and swing trading

**Key Elements**:
- **Uptrend Stock Definition**: Stocks above 200MA/50MA/20MA with positive 1-month performance
- **Green Regions**: Market in uptrend phase
- **Red Regions**: Market in downtrend phase
- **~10% Level (Lower Orange Dashed)**: Short-term bottom, extreme oversold
- **~40% Level (Upper Orange Dashed)**: Short-term top, market overheating

**Swing Trading Strategy**:
- **ENTER LONG**: When color changes from red to green (especially from <10-15% levels)
- **EXIT LONG**: When color changes from green to red (especially from >35-40% levels)
- **Timeframe**: Days to weeks

## Analysis Workflow

### Step 1: Receive Chart Images and Prepare Analysis

When the user provides breadth chart images for analysis:

1. Confirm receipt of chart image(s)
2. Identify which chart(s) are provided:
   - Chart 1 only (200MA Breadth)
   - Chart 2 only (Uptrend Ratio)
   - Both charts
3. Note any specific focus areas or questions from the user
4. Proceed with systematic analysis

**Language Note**: All subsequent thinking, analysis, and output will be in English.

### Step 2: Load Breadth Chart Methodology

Before beginning analysis, read the comprehensive breadth chart methodology:

```
Read: references/breadth_chart_methodology.md
```

This reference contains detailed guidance on:
- Chart 1: 200MA-based breadth index interpretation and strategy
- Chart 2: Uptrend stock ratio interpretation and strategy
- Signal identification and threshold significance
- Strategy rules and risk management
- Combining both charts for optimal decision-making
- Common pitfalls to avoid

### Step 3: Examine Sample Charts (First Time or for Reference)

To understand the chart format and visual elements, review the sample charts included in this skill:

```
View: assets/SP500_Breadth_Index_200MA_8MA.jpeg
View: assets/US_Stock_Market_Uptrend_Ratio.jpeg
```

These samples demonstrate:
- Visual appearance and structure of each chart type
- How signals and thresholds are displayed
- Color coding and marker systems
- Historical patterns and cycles

### Step 4: Analyze Chart 1 (200MA-Based Breadth Index)

If Chart 1 is provided, conduct systematic analysis:

#### 4.1 Extract Current Readings

From the chart image, identify:
- **Current 8MA level** (orange line): Specific percentage
- **Current 200MA level** (green line): Specific percentage
- **8MA slope**: Rising, falling, or flat
- **200MA slope**: Rising, falling, or flat
- **Distance from 73% threshold**: How close to overheating
- **Distance from 23% threshold**: How close to extreme oversold
- **Most recent date** visible on the chart

#### 4.1.5 CRITICAL: Latest Data Point Detailed Trend Analysis

**This step is MANDATORY to avoid misreading recent trend changes.**

**CRITICAL WARNING**: Charts can be deceptive. The MAJORITY of analysis errors occur because the analyst:
1. Confuses the 8MA (orange) with the 200MA (green)
2. Reads historical trends instead of the CURRENT rightmost data points
3. Misidentifies which line is rising vs falling

**BEFORE analyzing trend direction, FIRST confirm line colors**:
- ✓ **8MA = ORANGE line** (fast-moving, more volatile)
- ✓ **200MA = GREEN line** (slow-moving, smoother)
- If unsure which is which, STOP and re-examine the chart legend/colors

Focus intensively on the **rightmost 3-5 data points** of the chart (most recent weeks):

**For 8MA (Orange Line) - Analyze the very latest trajectory**:
1. **Identify the absolute latest position**: Where is the 8MA at the rightmost edge of the chart?
2. **Trace back 3-5 data points** (approximately 3-5 weeks):
   - What was the 8MA level 1 week ago?
   - What was the 8MA level 2 weeks ago?
   - What was the 8MA level 3 weeks ago?
3. **Calculate the directional change**:
   - Is the latest value HIGHER or LOWER than 1 week ago?
   - Is the latest value HIGHER or LOWER than 2 weeks ago?
   - What is the trend: consistently rising, consistently falling, or mixed?
4. **Determine the CURRENT slope** (not historical slope):
   - **Rising**: Latest data point is higher than previous 2-3 points AND shows upward curvature
   - **Falling**: Latest data point is lower than previous 2-3 points AND shows downward curvature
   - **Flat**: Latest data point is approximately equal to previous points (within 2-3%)

**Critical Questions to Answer**:
- [ ] Is the 8MA currently moving UP or DOWN at the rightmost edge?
- [ ] If there was a recent trough, has the 8MA **sustained** the upward move, or has it rolled over?
- [ ] Count consecutive periods of increase: How many consecutive periods has 8MA risen? (Need 2-3 for confirmation)
- [ ] Count consecutive periods of decrease: How many consecutive periods has 8MA fallen? (Indicates failed reversal if declining after trough)

**For 200MA (Green Line) - Analyze the very latest trajectory**:
1. **Identify the absolute latest position**: Where is the 200MA at the rightmost edge?
2. **Trace back 4-6 weeks**:
   - What was the 200MA level 2 weeks ago?
   - What was the 200MA level 4 weeks ago?
3. **Determine the CURRENT slope**:
   - Is it rising, falling, or flat in the most recent period?

**Failed Reversal Detection** (CRITICAL):
If an 8MA trough (purple ▼) was recently identified:
- [ ] Did the 8MA rise for only 1-2 periods and then turn back down?
- [ ] Did the 8MA fail to reach 60% before turning down?
- [ ] Is the 8MA currently declining again after the bounce?
- **If YES to any**: This is a **FAILED REVERSAL** - DO NOT ENTER, signal is INVALID

**Example Analysis Format**:
```
Latest 8MA Data Points (rightmost to left):
- Current (Week 0): 48%
- 1 week ago: 52%
- 2 weeks ago: 55%
- 3 weeks ago: 50%

Analysis: 8MA is FALLING. It rose from 50% to 55% (weeks 3-2), but has since declined to 48%.
This shows a failed reversal pattern - bounce was temporary, downtrend has resumed.
SLOPE: Falling (not rising!)
```

**MANDATORY CROSS-CHECK** (to catch misreadings):
After determining the trend, ask yourself:
- [ ] "If I claimed 8MA is RISING, but it's