Detection Methodology
BubbleGuard PRO synthesizes nine independent analytical modules into a single Composite Bubble Score (0–100%). Each module captures a distinct dimension of irrational market behavior, from classical valuation overstretch to real-time statistical tests for explosive price dynamics.
Valuation25%
CAPE ratio, P/E, P/B, EV/EBITDA z-scores relative to 30-year history. Deviation from fundamental value is the first pillar.
LPPLS20%
Log-Periodic Power Law Singularity fit (Sornette et al.). Detects super-exponential acceleration with oscillations that precede regime changes.
GSADF15%
Phillips-Shi-Yu (2015) recursive BSADF test for explosive autoregressive behavior. Historically precise at flagging equity and credit bubbles.
Technical12%
RSI, Bollinger Band width, rate-of-change, momentum factor crowding, and volatility regime signals.
Macro10%
Real rates, credit spreads, yield curve shape, money supply growth, and global liquidity cycle indicators.
Sentiment8%
Put/call ratios, AAII sentiment, social volume anomalies, IPO issuance pace, and fund flow data.
Microstructure5%
Bid-ask spread compression, order-book depth deterioration, and abnormal short-interest levels.
ML Ensemble3%
XGBoost trained on 60+ historical bubble episodes. Provides a model-free baseline score.
Liquidity2%
Amihud illiquidity ratio, turnover anomalies, and funding-liquidity stress indicators.
Composite Score Interpretation
0–29
Low
30–49
Moderate
50–69
Elevated
70–84
High
85–100
Extreme
Disclaimer: BubbleGuard PRO scores are for informational purposes only and do not constitute financial advice. Past model performance does not guarantee future results.