LIX FAQ — ONELIX risk score and indicators

No. It helps contextualize a market environment, but it cannot predict the timing or magnitude of a correction on its own.

Because each indicator observes a different dimension: valuation, rates, credit, economic cycle or volatility. Combining them reduces the risk of relying on one isolated signal.

The LIX score summarizes several indicator families into a normalized reading so the risk context can be compared more consistently over time.

Yes, to contextualize historically more favorable zones (less frequent drawdowns, sometimes higher average returns over 24 months). This is not a buy signal or a guarantee of future performance.

A correction is roughly a 10% decline; a bear market, at least 20% on a major index; crash often means a major correction. ONELIX tracks 15 episodes of 19% or more since 1962.

No. A LIX in the SEREIN zone indicates a statistically less stretched context, but bull runs can last for years. A rising LIX from a low zone can also signal the end of euphoria — cross-check with underlying indicators.

The LIX (Lucid Index) is a proprietary composite score aggregating 12 normalized indicators to synthesize a vigilance level on market orientation, on a 0–100% scale.

No. It contextualizes statistical and historical risk, without a correction calendar.

According to historical data, several indicator families are tense at the same time; history associates that with more corrections, with no date. It is not a sell signal.

Yes. General steps are documented, but weights, temporal smoothing and aggregation parameters remain proprietary.

Trend. The LIX is more informative when its direction changes than when it simply reaches an isolated threshold.

In the SERENE zone, major declines have historically been less frequent and returns higher than in the CRITICAL zone. This is a statistical reading, not a buy signal or performance guarantee.

Historically, this often accompanies easing market stress — sometimes after a bear market or major correction, when the LIX sits in the SERENE zone. This is not a buy signal or a guaranteed recovery.

It describes indicator selection, normalization, LIX reading, historical statistics and limits.

No. They describe past behavior on historical data.

To reduce dependence on a single signal and read several risk dimensions.

The total stock market capitalization (Wilshire 5000) to nominal GDP ratio, transformed into a 0–100% ONELIX score via an exponential trend and standard deviations.

Both measure valuation but from different angles. The Buffett Indicator compares market capitalization to GDP (a macroeconomic reference). Robert Shiller's PE10 / CAPE compares price to ten-year smoothed real earnings.

Wilshire 5000 (^FTW5000) for capitalization, nominal GDP from FRED (series GDP), exponential trend and ONELIX proprietary normalization.

No. It describes an extreme valuation context and historical detection frequencies, not a market calendar.

Globalization of earnings, financialization, low rates and sector composition can justify a higher "normal level" than historically.

No. It is more useful cross-checked with PE10, Earnings Yield Gap, Margin Debt, credit, rates and volatility.

The cyclically adjusted price-to-earnings ratio of the S&P 500: real price divided by ten-year average real earnings, using Robert Shiller's data.

This average reduces the impact of an exceptionally high or low year of profits and captures normal earning capacity through a complete cycle.

The PE10 / CAPE compares prices to ten-year real average earnings. The Buffett Indicator compares total stock market capitalization to nominal GDP.

No. It contextualizes long-term valuations and expected returns, but it does not predict the timing of corrections on its own.

ONELIX computes rolling standard deviations of CAPE since 1950, then applies a proprietary formula to produce a normalized score integrated into the LIX.

Low rates, high profit margins or a favorable sector composition can sustain elevated multiples for several years.

The gap between the 10-year Treasury and the 3-month Treasury (10Y-3M spread), normalized to an ONELIX score of 0–100%. A high score signals a flat or inverted curve.

It is the most widely followed measure of curve inversion and its historical correlation with US recessions since 1969.

No. The curve mainly reads the macro cycle. A recession can occur without an immediate equity correction — hence 40% of crashes not detected at the peak.

10-year Treasury (FRED DGS10), 3-month Treasury (FRED DGS3MO), proprietary ONELIX calculation (z-scores, persistence, 0–100% normalization).

No. It informs on the macro cycle and historical frequencies (27% / 27% / 40%), without equity market timing.

No. Cross-check with Interest Rates, high yield spreads, valuation, macro cycle and volatility.

The consistency between real S&P 500 valuation and long-term rates (10-year Treasury), synthesized in an ONELIX score of 0–100%. A high score signals an expensive market in a restrictive rate environment.

An expensive market does not carry the same risk in every rate environment. The expensive market + high rates combination (1980, 2000, 2007) is historically the most toxic.

Real S&P 500 (inflation-adjusted, Shiller series), 10-year Treasury (FRED DGS10) and proprietary ONELIX calculation (sum of z-scores, 0–100% normalization).

No. It identifies valuation/rate tension zones and historical detection frequencies (20% / 27% / 47%), without market timing.

No. It is more useful cross-checked with the yield curve, high yield spreads, valuation, macro cycle and volatility.

30-day implied volatility of S&P 500 options, synthesized into an ONELIX score of 0–100% via the monthly median.

The VIX reads short-term equity implied volatility; Gold Volatility reads cross-asset stress via a safe-haven asset.

CBOE VIX (FRED VIXCLS), monthly median, proprietary ONELIX normalization.

The VIX is contrarian: a low reading at the top often reflects complacency, not the absence of risk.

No. It informs on sentiment and the price of protection, without providing a market calendar.

No. It must be cross-checked with credit, valuation, leverage and cross-asset volatility.

Deterioration of the US labor market: 3-month moving average of BLS unemployment minus the 12-month low, with a reference threshold of 0.5 percentage point.

No. It confirms macroeconomic recession risk; it is not designed as a direct equity timing signal.

0.5 percentage point: when the 3-month moving average of unemployment exceeds the 12-month low by 0.5 pp.

Unemployment is a lagging indicator: it deteriorates after financial conditions tighten and often after part of the equity correction.

Monthly unemployment rate published by the BLS (FRED UNRATE series), public Claudia Sahm rule calculation, proprietary ONELIX normalization.

No. It should be cross-checked with valuation, rates, credit and volatility for a complete market risk reading.

The ICE BofA OAS premium between high yield bonds and Treasuries, transformed into an ONELIX score of 0–100% with inverted logic (low spread = high score).

A low spread (complacency) generates a high score at the market peak; a high spread (panic) generates a low score — contrarian reading similar to the VIX.

ICE BofA US High Yield Option-Adjusted Spread (FRED BAMLH0A0HYM2), inverted z-scores, proprietary ONELIX normalization.

Contrarian indicator: a compressed spread at the peak reflects credit complacency (e.g. 2021 at 2.5%), not the absence of risk.

No. It informs on credit complacency or stress and historical frequencies (63% / 38% / 0%), without market timing.

No. Cross-check with yield curve, Interest Rates, valuation, leverage (Margin Debt) and volatility.

The gap between the earnings yield on equities (inverse of S&P 500 P/E) and the yield on 10-year Treasury bonds.

Bonds represent an alternative source of return. The comparison helps assess whether equities offer sufficient relative compensation in a given rate regime.

A low gap signals that equities are expensive relative to bonds; the model transforms this into a high score (risk), and vice versa for a wide gap.

No. It contextualizes the relative valuation of equities versus bonds, but it does not predict the timing of corrections on its own.

ONELIX computes standard deviations of the gap with inverted logic, then applies a proprietary formula to produce a normalized score integrated into the LIX.

PE10 / CAPE measures absolute valuation via smoothed earnings; the EYG explicitly incorporates bond yields as an alternative source of return.

The total debt borrowed by investors from brokers to buy stocks, read as year-over-year change relative to market capitalization, then normalized into a 0–100% ONELIX score.

The raw level grows with market size; a dynamic reading relative to capitalization better contextualizes leverage excesses.

Monthly FINRA data (NYSE / FINRA Margin Debt) since 1960, CPI inflation-adjusted, with market capitalization and proprietary ONELIX normalization.

No. It describes speculative euphoria and leverage-related vulnerability, not a market calendar.

ONELIX computes inflation-adjusted YoY change, relates it to market cap, then transforms it into a 0–100% score via standard deviations and a proprietary formula.

No. It must be cross-checked with valuation, rates, credit and volatility.

The annualized volatility of gold prices over 20 days, transformed into a proprietary ONELIX score from 0 to 100%. A high score signals systemic stress and flight to quality relative to history.

The VIX reflects mostly short-term implied volatility via S&P 500 options. Gold Volatility reads cross-asset tension via a safe-haven asset, sensitive to systemic crises, real rates and the dollar.

Prices come from LBMA Gold Price (spot) and the SPDR Gold Shares (GLD) ETF. ONELIX computes 20-day realized volatility, then applies a proprietary transformation with persistence and historical contextualization.

Yes. The general logic (20-day volatility, 0–100% score) is documented, but detailed model parameters remain proprietary.

No. It describes a statistical context of systemic stress. Elevated levels have historically accompanied some major corrections, without providing a precise date.

No. It is more useful cross-checked with VIX, Margin Debt, Big Cap Volatility, credit, valuation and the macro cycle.

It measures the instability of the largest capitalizations' relative weight versus the rest of the market. The ONELIX score is a normalized 0–100% version.

The VIX reads mostly short-term implied volatility via options. Big Cap Volatility reads slower structural fragility linked to mega-cap concentration in the US equity market.

Capitalization series come from the Kenneth French Data Library (market equity breakpoints). ONELIX then applies a proprietary transformation and percentile normalization.

Yes. The general logic (top 5% vs median concentration, rolling volatility, historical percentile) is documented, but detailed model parameters remain proprietary.

No. It describes a statistical context of structural fragility. Elevated levels have historically increased the frequency of major corrections at 12–24 months, without a precise date.

No. It is more useful when cross-checked with VIX, Margin Debt, Gold Volatility, credit, valuation and macro cycle.

The deviation of the real S&P 500 (inflation-adjusted) from its long-term exponential growth trend.

The long-term trend provides a stable historical reference and helps measure the market's extension or normalization phases.

S&P Mean Reversion measures the deviation of the S&P 500 from its trend. The Buffett Indicator compares total stock market capitalization to nominal GDP.

No. It measures a deviation from trend, but it does not predict the timing of corrections on its own.

ONELIX computes standard deviations from the exponential trend, then applies a proprietary formula to produce a normalized score integrated into the LIX.

A positive deviation can persist if liquidity, rates, expected growth or investor confidence durably support the market.