ibd-distribution-day-monitor

---
name: ibd-distribution-day-monitor
description: Use when the user wants a daily post-close market-deterioration check, before increasing TQQQ/QQQ exposure, or to evaluate an uptrend's vulnerability via IBD-style Distribution Days.
category: Market & Macro
version: 1.0.0
tools: []
---

# IBD Distribution Day Monitor

Detect IBD-style Distribution Days for major market ETFs — QQQ as a Nasdaq proxy, SPY as an S&P 500 proxy — and produce a daily market-deterioration signal plus a TQQQ/QQQ exposure recommendation. Designed for post-market-close review.

## When to Use
- Daily, after the US market close
- Before increasing TQQQ exposure or rebalancing leveraged positions
- When evaluating whether an uptrend is becoming vulnerable to a correction
- As an upstream input ahead of Follow-Through Day detection or other market-state analysis

Do not use this to execute trades or generate discretionary predictions outside the IBD ruleset — it produces a risk-management signal, not a trading instruction.

## Core Rule
A Distribution Day is flagged when both are true: (1) today's close is at least 0.2% below yesterday's close, and (2) today's volume exceeds yesterday's volume.

A Distribution Day drops out of the active count when either: more than 25 trading sessions have elapsed since it occurred, or the index has gained 5% from that day's close (measured from the post-DD high by default). A same-day Distribution Day is never invalidated immediately — there is no subsequent session yet to measure the 5% gain against.

Count active Distribution Days over three windows — d5, d15, d25 (sessions elapsed ≤5, ≤15, ≤25) — meaning each window actually inspects N+1 sessions (age 0 through N inclusive).

## Risk Classification
| Risk | Trigger |
|---|---|
| NORMAL | d25 ≤ 2 |
| CAUTION | d25 ≥ 3 |
| HIGH | d25 ≥ 5, or d15 ≥ 3, or d5 ≥ 2 |
| SEVERE | d25 ≥ 6, or d15 ≥ 4, or (index below its 21EMA/50MA AND d25 ≥ 5) |

When both QQQ and SPY are evaluated, combine QQQ-weighted (TQQQ-aware): any single SEVERE reading escalates the overall call to SEVERE; a QQQ HIGH escalates overall to HIGH; and QQQ NORMAL with SPY HIGH still escalates to HIGH (broad-market spillover).

## Exposure Policy
| Risk | Action | Target Exposure (TQQQ) | Trailing Stop |
|---|---|---|---|
| NORMAL | Hold or follow base strategy | 100% | base |
| CAUTION | Avoid new adds | 75% | min(base, 7%) |
| HIGH | Reduce exposure | 50% | min(base, 5%) |
| SEVERE | Close TQQQ or hedge | 25% | min(base, 3%) |

QQQ (unleveraged) uses a less aggressive version of the same table: HIGH → 75%, SEVERE → 50%.

## Methodology
Use web_search / knowledge_base_search to pull recent OHLCV history (roughly 80 trading sessions) for the configured symbols. Apply the Distribution Day rule above, track d5/d15/d25 active counts, and check whether price is below its 21-day EMA or 50-day SMA. Classify each index, combine per the risk table, and translate that into the exposure/action recommendation for the user's stated instrument and current exposure level.

## Operating Principles
- Always explain which specific dates contributed to the active count.
- Treat missing or unreliable volume data as a warning flag, not as a Distribution Day.
- Never place trades — output a risk-management suggestion only.

Related: this pairs with a Follow-Through Day skill (bottom confirmation, the counterpart top-side signal) and a Market Top Detector skill (composite 0-100 top-probability score).