# Selloff Cause And Response Protocol

## Purpose

The agent must prioritize comprehensive situation judgment before ticker-level action.

During a sharp decline, the first question is not "sell or hold?" It is:

`What kind of selloff is this, and what action has positive expected value now?`

## Cause Stack

Every major drop must be decomposed into five drivers:

1. `MACRO`: jobs, inflation, yields, Fed hike/cut expectations, dollar, liquidity.
2. `EARNINGS`: bellwether results, guidance, margin, AI/semiconductor expectations.
3. `LIQUIDITY`: IPO subscriptions, large offerings, index flows, fund redemptions, margin pressure.
4. `POSITIONING`: crowded AI/semiconductor trades, valuation stretch, options/gamma, forced deleveraging.
5. `TECHNICAL`: moving-average breaks, failed bounce, volume distribution, breadth collapse, VIX expansion.

Do not attribute a selloff to one headline if several layers are active.

## Current Example Template

When the market falls after a strong jobs report, rising yields, Broadcom earnings/guidance reaction, and SpaceX IPO liquidity concerns:

- `MACRO`: strong employment data can raise yields and revive Fed hike or no-cut risk.
- `EARNINGS`: Broadcom-like reaction can reset AI/semiconductor expectations even if headline numbers are strong.
- `LIQUIDITY`: a massive IPO can force investors to create cash and reduce other risk exposures.
- `POSITIONING`: crowded AI winners can sell off together when perfection is no longer rewarded.
- `TECHNICAL`: if QQQ/SMH/SOXX lose key levels with volume, the decline becomes more than headline noise.

## Pre-Selloff Defense Score

Before the decline happens, score `CRASH RISK 0-100`.

Inputs:

- Major macro data within 24-48 hours.
- Yields rising while growth stocks are extended.
- Big tech or semiconductor bellwether earnings within 24 hours.
- IPO/secondary/offering/liquidity absorption risk.
- Narrow leadership and weak breadth.
- VIX rising from complacent levels.
- QQQ/SMH/SOXX stretched above moving averages.
- Holdings concentrated in the same risk factor.

Labels:

- `0-25`: normal risk.
- `26-50`: hedge/trim watch.
- `51-70`: pre-defense required.
- `71-85`: reduce high-beta exposure before event.
- `86-100`: no new risk; cash/hedge first.

Required pre-defense actions:

- Identify holdings to trim before the event.
- Identify positions that can be held through volatility.
- Decide whether SOXS/SQQQ hedge watch is allowed.
- Raise cash only if the cost of cash is lower than the expected drawdown risk.
- Do not wait for the drop to decide which positions are tactical.

## Post-Selloff Triage

After the market has already fallen, use this order:

1. Confirm whether the cause is still active.
2. Separate `thesis damage` from `price damage`.
3. Check whether the selloff is `capitulation`, `distribution`, `failed bounce`, or `trend break`.
4. Compare each holding against cash, SOXS/SOXL, SMH/SOXX, and stronger external opportunities.
5. Decide the minimum useful action.

## Minimum Useful Action Labels

- `NO PANIC SELL`: decline looks broad/temporary; wait for rebound or confirmation.
- `HOLD WITH STOP`: thesis intact, but invalidation level is now mandatory.
- `SELL INTO REBOUND`: do not sell lows; use bounce to reduce weak/high-beta exposure.
- `PARTIAL TAX-LOSS RESET`: realize part of a loss and rebuy only if re-entry remains attractive.
- `FULL TAX-LOSS RESET`: sell and rebuy only when spread/slippage/re-entry risk is low and thesis remains intact.
- `TRIM NOW`: risk is high and bounce odds are poor.
- `EXIT NOW`: thesis is broken or dilution/guidance/filing damage is confirmed.
- `ROTATE TO STRONGER SETUP`: replacement clearly wins after tax, spread, FX, settlement, and missed rebound risk.
- `CASH FIRST`: no clean edge; reduce complexity.
- `SOXS DEFENSE`: semiconductor breakdown is confirmed and the trade has target, stop, time stop, and available cash.

## Panic Sell Filter

Do not panic sell just because:

- The whole market dropped on macro/yield pressure.
- The holding fell with its sector without company-specific damage.
- The first after-hours or premarket print is thin.
- The user feels the urge to "do something."

Consider selling or trimming when:

- The original thesis is damaged.
- The stock is tactical/speculative and violates invalidation.
- The holding is too large for the current regime.
- A rebound is likely weak and the capital has a better destination.
- A tax-loss reset improves after-tax optionality without losing the setup.

## Tax-Loss Reset Rule

For Korean-resident US stock planning, the working model is:

- Overseas stock gains/losses are assessed annually in KRW.
- Annual basic deduction: 2,500,000 KRW.
- Working tax drag: roughly 22% on taxable gains.
- Loss realization can offset gains in the same tax year.

This is planning, not tax advice. Confirm final handling with the broker tax report, HomeTax, or a tax professional.

Tax-loss reset is allowed only when all are true:

1. The holding thesis is still valid or the reset is part of a planned exit.
2. Spread, FX, and slippage do not consume the tax benefit.
3. Re-entry risk is acceptable.
4. The reset does not break cash needed for SOXL/SOXS or stronger opportunities.
5. The action is recorded in `tax_lots_template.csv` or a trade update.

Tax-loss reset output must include:

- Estimated realized loss in KRW.
- Tax benefit estimate if there are offsetting gains.
- Re-entry plan: same day, staged, wait for level, or no rebuy.
- Risk of missing rebound.
- Whether the action is tax-motivated, risk-motivated, or both.

## Holding-Level Selloff Review

For each holding, output:

- Ticker.
- Weight.
- Average cost.
- Current price.
- Current P/L.
- Thesis status: `INTACT`, `DAMAGED`, `BROKEN`, `UNKNOWN`.
- Chart status: `SUPPORT HOLD`, `SUPPORT LOST`, `OVERSOLD`, `FAILED BOUNCE`, `BASE BUILDING`, `NO EDGE`.
- Cause sensitivity: macro, semis, space/defense, liquidity, company-specific.
- Action: one of the minimum useful action labels.
- Re-entry trigger if sold or trimmed.

## Portfolio-Level Conclusion

Every major selloff report must end with:

- `Primary cause`.
- `Cause still active?`
- `Panic sell? yes/no`.
- `Rebound wait? yes/no and condition`.
- `Minimum useful action`.
- `Top 3 holdings to protect`.
- `Top 3 holdings to reduce if rebound appears`.
- `Tax-loss reset candidates`.
- `SOXL/SOXS status`.
- `Cash status`.

## Kakao Summary Format

`급락판단: 원인 [macro/earnings/liquidity/positioning/technical]. 패닉셀 [금지/부분허용/필요]. 반등대기 [...]. 최소액션 [...]. 세금리셋 [...]. SOXL/SOXS [...].`