Skill: Fundamental Analysis

Skill: Fundamental Analysis

Trigger Conditions

• Invoked after market-snapshot has run and its JSON is available in context (labeled ## MARKET CONTEXT (PRE-FETCHED):)
• Invoked after portfolio JSON has been extracted (holdings, watchlist, cash)
• Do NOT invoke without portfolio data — requires at minimum holdings list and available cash
• Do NOT re-fetch macro data (S&P, VIX, sector, Fed) if a market context block is already provided

Data Source Priority

1. market-data connector (see .mcp.json)
2. No WebSearch or WebFetch fallback — all data routes through Gemini

When a ## MARKET CONTEXT (PRE-FETCHED): block is present: skip macro searches entirely, focus all calls on stock-specific data (prices, earnings, analyst ratings, financials).

Anti-Hallucination Rules

1. Use web search before making ANY claim about current data (prices, ratings, earnings dates, VIX, Fed policy, sector performance)
2. If data cannot be found via search, state: "Unable to verify [X] via web search"
3. NEVER estimate or assume current prices — search each ticker individually
4. If search results are unclear, acknowledge the uncertainty
5. Cite specific sources for major claims (analyst targets, earnings dates)
6. If conflicting data is found, present both sources and note the conflict

Data Freshness Standards

• Prices: within the last 24 hours
• Analyst data: within the last 30 days
• Earnings dates: explicitly stated (not inferred from quarterly patterns)
• Fed policy: reflects the most recent FOMC meeting

Critical Search Requirements

Data Point	Search Query
Stock price	[TICKER] stock price today
Analyst ratings/targets	[TICKER] analyst ratings
Earnings date	[TICKER] earnings date
VIX level	VIX current level
Fed policy	Federal Reserve latest decision
Sector performance	sector performance this week

Workflow Steps

Step 0 — Market Regime Classification

If ## MARKET CONTEXT (PRE-FETCHED): block is present, read regime from it and skip to Step 1.

Otherwise, search and classify:

1. S&P 500 Technical Position — current level, distance from 50-day MA (bullish if >3%), distance from 200-day MA (bullish if >8%)
2. Volatility & Sentiment — VIX level (search: VIX level today). Interpretation: <15=Greed, 15–20=Neutral, 20–25=Caution, >25=Fear
3. Sector Leadership — last 5 days sector performance. Growth leading=Risk-On; Defensive leading=Risk-Off
4. Fed Policy Stance — latest decision. Cutting=Dovish, Pausing=Neutral, Hiking=Hawkish

Output this block:

MARKET REGIME: [RISK-ON / TRANSITIONAL / RISK-OFF]

Evidence:
- S&P 500: [Above/Below] 50-day MA by X%
- VIX: X.XX ([Greed/Neutral/Fear])
- Sector Leadership: [Growth/Mixed/Defensive]
- Fed Stance: [Dovish/Neutral/Hawkish]

Investment Implications:
- [Deployment guidance based on regime]

Step 1 — New Opportunity Discovery (MANDATORY)

Perform ALL of the following searches:

1. best performing sectors this year — identify sectors missing from portfolio
2. stocks breaking out new highs this week — momentum plays
3. analyst upgrades past 7 days — newly recommended stocks
4. undervalued stocks strong earnings growth — value opportunities
5. Regime-adjusted:
   • Risk-On → AI stocks earnings growth, growth technology leaders
   • Risk-Off → dividend aristocrats, defensive consumer staples

For every viable new stock found:

• Search [TICKER] current price analyst target
• Search [TICKER] earnings growth rate
• Score using the 1–10 framework below
• Calculate recommended position size from available cash

New Stock Evaluation Template:

Ticker & Company Name:
Current Price & Analyst Target:
Growth Rate & Key Metrics:
Fundamental Score (1–10):
Recommended Investment: $X = Y.XXX shares at $Z/share
Portfolio Fit Rationale:

Watching Stock Evaluation Template:

Ticker & Company Name:
Current Price & Analyst Target:
Growth Rate & Key Metrics:
Fundamental Score (1–10):
Recommendation: BUY (with allocation) / KEEP WATCHING (rationale) / STOP WATCHING (rationale)
Portfolio Fit Rationale:

Minimum requirement: Evaluate at least 3–5 new stocks AND all watching stocks before analyzing existing holdings.

Step 2 — Portfolio Scoring Framework

Score each stock 1–10 on:

• Revenue/earnings growth rate
• Analyst consensus and price target upside
• Sector momentum and macro tailwinds
• Valuation relative to growth (PEG, not raw P/E for growth stocks)
• Earnings date proximity (flag if within 14 days as a risk)

Step 3 — Allocation Framework

Regime-Adjusted Deployment Targets:

Market Regime	Quality Threshold	Deployment Target	Cash Target
Risk-On	Combined ≥ 6.0	70–100%	0–30%
Transitional	Combined ≥ 6.5	50–70%	30–50%
Risk-Off	Combined ≥ 7.0	30–50%	50–70%

Position Sizing Logic (Fractional Share Compatible):

• High conviction (Score 8–10): $25–40 per stock
• Medium conviction (Score 6.5–7.9): $15–25 per stock
• Speculative (Score 6.0–6.4): $10–15 per stock (Risk-On only)

Always express positions as:

"$X investment = Y.XXX shares at $Z/share"

Portfolio Construction Rules:

• Max single position: 35% of available cash
• Sector concentration limit: 60% of available cash
• Must have ≥2 sectors represented if deploying >50% of cash

Currency Rules

Always use the native trading currency of each stock or fund:

• NYSE/NASDAQ → USD ($)
• LSE → GBP (£) or GBp (pence)
• Euronext → EUR (€)
• TSE → JPY (¥)
• ASX → AUD (A$)
• TSX → CAD (C$)

Show all prices, targets, position sizes, and P&L in each instrument's native currency. If portfolio mixes currencies, display each position in its own currency.

Portfolio Interpretation Rules

1. Fractional Shares: If fractional: true in portfolio JSON — "Buy In Price" = total investment amount (not price per share). If fractional: false — "Buy In Price" = actual price per share; assume 1 share.
2. P&L Calculation:
   • Fractional = TRUE: Shares = Buy In Price ÷ Price at purchase; P&L = (Shares × Current Price − Buy In Price) ÷ Buy In Price
   • Fractional = FALSE: P&L = (Current Price − Buy In Price) ÷ Buy In Price
3. Days Held: <7=Very new; 7–30=New; 30–90=Established; >90=Long-term
4. Do NOT recommend "taking profits" on positions with <10% gains.

Opportunity Cost Rule

If holding >50% cash while S&P is up >10% YTD, MUST justify:

• What specific risk is being avoided
• What entry condition is being waited for
• Why a defensive posture is warranted

Cash is a position, but so is missing the rally.

Critical Philosophy

• In bull markets (Risk-On): default is INVESTED, not cash
• In bear markets (Risk-Off): default is CASH, not invested
• Quality matters, but so does participation
• Job is finding opportunities, not finding reasons to hold cash

Output Schema

Section 1 — Allocation Summary Box (top of report)

💰 WEEKLY ALLOCATION RECOMMENDATION

Available Cash: [FROM USER DATA]
Recommended Deployment: $XX (XX%)
Cash to Hold: $XX (XX%)

Market Regime: [RISK-ON/TRANSITIONAL/RISK-OFF]
Investment Posture: [AGGRESSIVE/BALANCED/DEFENSIVE]

Allocations:
1. [TICKER]: $XX (X.XXX fractional shares at $YY/share)
2. [TICKER]: $XX (X.XXX fractional shares at $YY/share)
3. Cash Reserved: $XX

Quality Bar: [X.X/10] — Only recommending stocks above this threshold

Rationale: [2–3 sentences on allocation mix given current environment]

Section 2 — New Investment Opportunities

• 3–5 evaluated new stocks with scores and recommendations
• Format: TICKER: Invest $XX = Y.XXX shares at $Z/share (Score: X.X/10)

Section 3 — Watching Stocks Analysis

• Every stock on the watch list evaluated
• Clear decision per stock: BUY, KEEP WATCHING, or STOP WATCHING

Section 4 — Existing Holdings Analysis

• Analysis of current positions and P&L
• Any position adjustments (with fractional share calculations)

Section 5 — Final Allocation Decision

• Full deployment plan across new stocks, existing positions, and cash reserves

Structured JSON Block (for portfolio-manager consumption)

After the full analysis report, append:

<analysis-json>
{
  "regime": "RISK-ON|TRANSITIONAL|RISK-OFF",
  "quality_threshold": 0.0,
  "holdings": [
    {"ticker": "...", "score": 0.0, "action": "HOLD|TRIM|EXIT|ADD", "currency": "..."}
  ],
  "new_opportunities": [
    {"ticker": "...", "score": 0.0, "recommended_amount": 0, "currency": "...", "price": 0.0}
  ],
  "watchlist": [
    {"ticker": "...", "score": 0.0, "action": "BUY|KEEP_WATCHING|STOP_WATCHING", "recommended_amount": 0, "currency": "..."}
  ],
  "total_recommended_deployment": 0
}
</analysis-json>

Anti-Patterns

• Never estimate current prices — always search individually
• Never recommend profit-taking on <10% gains
• Never hold >50% cash without written justification when S&P is up >10% YTD
• Never skip new opportunity discovery — it is mandatory regardless of market conditions
• Never score growth stocks on raw P/E; use PEG or growth-relative metrics

Verification Checklist

• All current prices searched and verified (no estimates)
• Fractional share positions calculated correctly
• Actual P&L calculated for all holdings
• Market regime explicitly classified
• Score thresholds adjusted for regime
• Deployment % justified given regime and quality
• If holding >50% cash, opportunity cost addressed
• Earnings dates within 14 days flagged as risk
• Growth stocks scored on growth metrics, not raw P/E
• All watching stocks evaluated with clear decisions