diff --git a/.story_kit/work/1_upcoming/147_bug_activity_indicator_still_only_shows_thinking_despite_bug_140_fix.md b/.story_kit/work/1_upcoming/147_bug_activity_indicator_still_only_shows_thinking_despite_bug_140_fix.md
index 76f5a0f..3b5fad0 100644
--- a/.story_kit/work/1_upcoming/147_bug_activity_indicator_still_only_shows_thinking_despite_bug_140_fix.md
+++ b/.story_kit/work/1_upcoming/147_bug_activity_indicator_still_only_shows_thinking_despite_bug_140_fix.md
@@ -6,17 +6,50 @@ name: "Activity indicator still only shows Thinking despite bug 140 fix"
 
 ## Description
 
-Bug 140 fixed the frontend display condition but activity labels still never appear. The likely root cause is that Claude Code stream-json PTY output does not emit raw Anthropic API format events (content_block_start with type tool_use) inside stream_event wrappers. The handle_stream_event function in server/src/llm/providers/claude_code.rs line 486 only matches content_block_start, which is the Anthropic streaming API format. Claude Code CLI stream-json may use a different event structure for tool calls.
+Bug 140 fixed the frontend display condition but activity labels still never appear. The full data path has been traced and the suspected failure point identified.
 
-Investigation needed:
-1. Add temporary logging in process_json_event (line 327) to dump all event types received from the PTY
-2. Determine the actual event format Claude Code uses for tool calls in stream-json mode
-3. Add matching for that format in handle_stream_event or process_json_event to fire activity_tx
+## End-to-End Data Path
 
-Key files:
-- server/src/llm/providers/claude_code.rs line 327: process_json_event
-- server/src/llm/providers/claude_code.rs line 486: handle_stream_event
-- server/src/http/ws.rs line 251: activity callback wiring
+### 1. Frontend display (FIXED by bug 140)
+- `frontend/src/components/Chat.tsx` line 686: `{loading && (activityStatus != null || !streamingContent) && (`
+- `frontend/src/components/Chat.tsx` line 697: `{activityStatus ?? "Thinking..."}`
+- `frontend/src/components/Chat.tsx` line 204: `setActivityStatus(formatToolActivity(toolName))` — called by `onActivity` callback
+
+### 2. WebSocket client receives event
+- `frontend/src/api/client.ts` line 350: `if (data.type === "tool_activity") this.onActivity?.(data.tool_name)`
+
+### 3. Server sends ToolActivity over WebSocket (WIRED CORRECTLY)
+- `server/src/http/ws.rs` line 251-254: activity callback sends `WsResponse::ToolActivity { tool_name }`
+- This callback is passed to `chat::chat()` as the `on_activity` closure
+
+### 4. chat::chat passes callback to Claude Code provider
+- `server/src/llm/chat.rs`: passes `on_activity` through to `claude_code::chat_stream`
+- `server/src/llm/providers/claude_code.rs` line 47: `mut on_activity: A` parameter
+- `server/src/llm/providers/claude_code.rs` line 70: creates internal `activity_tx` channel
+- `server/src/llm/providers/claude_code.rs` line 94: drains channel and calls `on_activity(&name)`
+
+### 5. PTY event processing (SUSPECTED FAILURE POINT)
+- `server/src/llm/providers/claude_code.rs` line 327: `process_json_event()` dispatches parsed JSON
+- Line 348-353: matches `"stream_event"` type → extracts inner `event` → calls `handle_stream_event()`
+- `server/src/llm/providers/claude_code.rs` line 486: `handle_stream_event()` matches on event type
+- Line 494-500: matches `"content_block_start"` with `content_block.type == "tool_use"` → sends to `activity_tx`
+
+### 6. The problem
+`handle_stream_event` only matches `content_block_start` — this is the **raw Anthropic streaming API format**. But Claude Code's `--output-format stream-json` may NOT emit raw Anthropic events wrapped in `stream_event`. It likely uses its own event types for tool calls (e.g. `tool_use_begin`, `tool_use`, or similar).
+
+The existing `process_json_event` also matches `"assistant"` (line 355) and `"user"` (line 363) event types from stream-json, but these are complete messages — they arrive after the tool call is done, not when it starts. So there's no event being caught at tool-call-start time.
+
+## Investigation Steps
+
+1. Add logging in `process_json_event` (line 334) to print every `event_type` received from the PTY during a chat session with tool use
+2. Identify which event type Claude Code emits when it starts a tool call
+3. Add matching for that event type to fire `activity_tx.send(tool_name)`
+
+## Key Files
+- `server/src/llm/providers/claude_code.rs` line 327: `process_json_event` — event dispatcher
+- `server/src/llm/providers/claude_code.rs` line 486: `handle_stream_event` — only handles Anthropic API format
+- `server/src/http/ws.rs` line 251: activity callback wiring to WebSocket
+- `frontend/src/components/Chat.tsx` line 203: `onActivity` handler that sets display state
 
 ## How to Reproduce
 
@@ -27,7 +60,7 @@ Key files:
 
 ## Actual Result
 
-Indicator always shows Thinking and never changes to tool activity labels like Reading file or Executing command
+Indicator always shows "Thinking..." and never changes to tool activity labels like "Reading file..." or "Executing command..."
 
 ## Expected Result
 
@@ -35,4 +68,6 @@ Indicator should cycle through tool activity labels as the agent calls tools
 
 ## Acceptance Criteria
 
-- [ ] Bug is fixed and verified
+- [ ] Activity indicator shows tool names (e.g. "Reading file...", "Executing command...") when the web UI agent calls tools
+- [ ] Indicator still falls back to "Thinking..." when no tool activity is in progress
+- [ ] Works for all tool types (Read, Write, Bash, Glob, Grep, etc.)