/news-reaction-failure-analyzer

name: news-reaction-failure-analyzer
description: Judge whether a market FAILED to react to news favorable to a crowded speculative position — step 2 of Jason Shapiro's COT contrarian process. Consumes a cot-contrarian-detector report (or an explicit direction) plus a Claude-curated events JSON, fetches the underlying price series with a documented fallback chain, and produces a fail-closed CONFIRMED / NOT_CONFIRMED / INSUFFICIENT_EVIDENCE verdict using a statistically validated drift-significance test (not a naive failure-ratio, which false-confirms on pure noise). Generic beyond COT — reusable for PEAD and macro-crowding news-failure checks. Use when the user asks to check news-failure confirmation, whether a crowded market "shrugged off" good/bad news, or wants to run Shapiro step 2 on a CROWDED_LONG/CROWDED_SHORT market.

News Reaction Failure Analyzer

Overview

Implements step 2 of Jason Shapiro's COT contrarian process: once a market is flagged as crowded (`cot-contrarian-detector`, step 1), check whether it FAILED to react to news that should have rewarded the crowd. A crowded-long market that doesn't rally on genuinely bullish news, or a crowded-short market that doesn't sell off on genuinely bearish news, is the core behavioral tell that the crowd has run out of buying/selling power — this is the confirmation step that turns "crowded" into a contrarian setup candidate (steps 3-5, still manual: price-action confirmation, entry, exit).

**Why this isn't a naive failure-ratio check:** an earlier design flagged "news failure" whenever fewer than half the relevant events "responded" — but under pure noise, roughly 69% of individual events fail to respond by chance, so that rule would CONFIRM on random noise 48-83% of the time depending on sample size. This skill instead requires the market to have moved *significantly against* the crowd's favorable news (a drift- significance test with a Monte-Carlo-verified null false-positive bound), never merely "didn't respond enough." See `references/news-failure-patterns.md` for the full statistical rationale.

When to Use This Skill

**English:**

• "Did the market shrug off [event] even though [asset] is crowded long/short?"
• "Run a news-failure check on [symbol]"
• "Is [symbol] confirmed for a Shapiro-style contrarian setup?"
• After `cot-contrarian-detector` flags a market CROWDED_LONG / CROWDED_SHORT

and the user wants to move to step 2

**Japanese:**

• 「この市場は好材料に反応しなかった？」
• 「COTで偏っているこの銘柄のニュース失敗を確認して」

**Do NOT use when:**

• The market isn't crowded (NEUTRAL classification) — this skill refuses

fail-closed without an explicit `--direction` override

• No curated events JSON exists yet — WebSearch must run first (Phase 2

below); never fabricate events or URLs to get a verdict

Prerequisites

• **FMP API Key:** Required. Set `FMP_API_KEY` or pass `--api-key`. Used

for price data only (`stable/historical-price-eod/light`) — coverage varies by symbol; see `references/price-source-map.md`.

• **Python 3.9+** with `requests` installed.
• **WebSearch access** to curate the events JSON (Phase 2). Skill degrades

gracefully without it (states the limitation; never fabricates events).

• **Optional:** a `cot-contrarian-detector` JSON report (`--detector-json`)

to auto-resolve symbol + direction, or supply `--direction` explicitly.

Workflow

Phase 1: Obtain symbol + direction

From a `cot-contrarian-detector` report (`--detector-json`, symbol looked up in `markets[]`) or directly from the user (`--symbol` + `--direction`). A `NEUTRAL` classification, a symbol missing from the report, or a report older than `--max-detector-age-days` (default 10) all refuse fail-closed with a specific reason — only an explicit `--direction` overrides.

Phase 2: Curate the events JSON via WebSearch

Search news in the evaluation window (`--window-days`, default 10) using the 4-tier source hierarchy (issuer/primary → SEC/official stats → wire → portal — see `references/news-failure-patterns.md`). Write findings into an events JSON from `references/news-failure-patterns.md`'s template — `event`, `event_time` (ISO8601 with explicit UTC offset), `source_url`, `source_tier`, `expected_impact` (BULLISH/BEARISH) per event.

**Never fabricate events or URLs.** WebSearch unavailable → state it explicitly; proceed without an events JSON only if the user accepts an `INSUFFICIENT_EVIDENCE` result (reason `no_events_provided`) — the CLI never raises an exception for a missing events file, it always exits 0 with a documented reason.

Phase 3: Run the CLI

python3 skills/news-reaction-failure-analyzer/scripts/analyze_news_reaction.py \
  --symbol B6 --detector-json reports/cot_crowding_2026-07-12.json \
  --events-json reports/nrf_events_B6_2026-07-12.json \
  --output-dir reports/

The script fetches the price series (documented fallback chain — futures symbol first, ETF proxy if 402/restricted or `rows == 0`; see `references/price-source-map.md`), computes effective dates / returns / z-scores per event, clusters events whose 3-trading-day windows overlap (independence guard), and synthesizes the verdict.

Phase 4: Present verdict + handoff

Present the verdict, aggregate stats (`drift_stat`, `responded_ratio`), and the evidence table (per-event returns/z-scores/reaction labels, with any `dropped_events` reasons shown — never silently hidden). If a proxy (`run_context.proxy_used`) was used, note the tracking-error caveat.

Emit a handoff block for `contrarian-setup-gate` (#241, not yet built):

{"news_failure": {"verdict": "CONFIRMED", "confidence": "HIGH", "report_path": "reports/nrf_B6_2026-07-12.json"}}

Output

• **JSON:** `reports/nrf_<symbol>_<as-of-date>.json` — `schema_version`,

`symbol`, `direction`, `expected_direction`, `actual_reaction` (`FAILED_TO_RALLY`/`FAILED_TO_SELL_OFF`/`RALLIED`/`SOLD_OFF`/ `MIXED_REACTION`/`NO_DATA`), `verdict`, `confidence`, `relevant_events_used`, `aggregate` (