Note. This content is published for educational and statistical purposes. It does not constitute investment advice under AMF / MiFID II regulations. Past performance does not guarantee future results.
What is the LIX?
The LIX (Lucid Index) is a proprietary composite indicator that aggregates signals from 12 individual indicators to provide a unique and synthetic measure of lucidity, on a scale of 0 to 100%. Calibrated on 64 years of historical data (1962–2025), it aims to maximize the detection of major corrections while minimizing false positives.
Its goal is not to predict a correction date, but to place the market within a vigilance regime based on historical data and observable signals.
The LIX is an original indicator developed specifically for this model, unlike classic finance indicators (PE10, Buffett Indicator, etc.). It uses a unique weighted aggregation methodology to provide a synthetic measure of the Lucid Index.
General principle
Each indicator is first normalized on a scale of 0 to 100%, then signals are aggregated according to a proprietary methodology incorporating optimized weighting and temporal smoothing. The result is a unique index reflecting the level of market lucidity.
Indicator families
- Valuation: Buffett, PE10 / CAPE, Earnings Yield Gap, S&P 500 Mean Reversion.
- Rates & Credit: interest rates, yield curve, Junk Bond Spreads.
- Macro Cycle: Sahm Rule.
- Volatility & Sentiment: VIX, Margin Debt, gold volatility, big cap volatility.
The LIX is a context indicator. It helps read vigilance level, without constituting buy or sell advice.
How the LIX is built
Step 1: indicator pre-processing
Each of the 12 indicators undergoes an optimized pre-transformation before normalization. These transformations (smoothing, persistence, momentum, z-score, etc.) were selected through systematic optimization across over 1,200 tested configurations.
Examples: exponential smoothing to reduce noise, rolling max to capture peak persistence, z-score to contextualize against recent history, momentum to detect trend changes.
Step 2: normalization
Each transformed indicator is normalized on a scale of 0 to 100% via its historical percentile rank. This normalization ensures all indicators are comparable and can be aggregated, regardless of their original units.
Step 3: proprietary aggregation
Normalized indicators are aggregated according to a proprietary methodology incorporating:
- Optimized weighting: each indicator contributes according to its predictive power, validated through backtesting on 64 years of data.
- Non-linear transformation: amplification of extreme signals to improve critical zone detection.
- Temporal smoothing (EMA): short-term noise filtering with exponential memory.
Step 4: output scale
The final LIX is expressed as a percentage, where 0% represents a SERENE level and 100% a CRITICAL historical level.
Exact weights, temporal smoothing parameters (EMA) and internal aggregation thresholds are not published. ONELIX documents the general logic (pre-processing, percentile, aggregation, scale) for educational reading, without exposing the full proprietary model.
Historical performance
The chart below shows the LIX score from January 1962 through December 2005. The recent period and full interactive history are available on the dashboard.
LIX — composite vigilance score
Monthly values, January 1962 → December 2005
Sources: proprietary ONELIX aggregation (12 normalized indicators). Red bands: 15 major corrections tracked in ONELIX.
Factual analysis of LIX performance during 15 major corrections (≥ 19%) since 1962. The normalized indicator (0–100%) is measured at the market peak, just before the drawdown.
Over 64 years of data (1962–2025), the LIX detected 6 of 15 major corrections with a level ≥ 75% at the market high, and 4 others with a moderate signal (60–75%). Missed corrections were mainly exogenous crises (Black Monday, Gulf War, COVID) difficult to anticipate with fundamental indicators.
Detection breakdown
- Clear detections (≥ 75%): 6 crashes — 40% (1966, 1969, 1973, 1998, 2000, 2022)
- Moderate signals (60–75%): 4 crashes — 27% (1962, 1980, 2008, 2025)
- Failures (< 60%): 5 crashes — 33% (1987, 1990, 2011, 2018, 2020)
Best historical signal: 2000 (95%) at the Internet bubble peak.
SERENE → CRITICAL vigilance zones
The LIX is read across five vigilance zones, from historically favorable conditions to extreme context:
- SERENE (0–20%): favorable market conditions. Over a 24-month horizon (1962–2026), a LIX in the SERENE zone was followed by a drawdown ≥20% in 0% of observed cases, versus 40.0% in the CRITICAL zone (80–100%). Average 24-month return: about +21.4% (SERENE) vs +0.3% (CRITICAL). Past performance is not indicative of future results.
- ATTENTIVE (20–40%): vigilance recommended.
- CAUTIOUS (40–60%): increased caution.
- VIGILANT (60–80%): multiple warning signals.
- CRITICAL (80–100%): conditions historically associated with major corrections.
In the SERENE zone, deep drawdown risk and high-return frequency have historically been in a more favorable profile than the CRITICAL zone — without a buy signal or performance guarantee. See the Returns tab in interactive LIX analysis for detailed frequencies.
Drawdown statistics and observed frequencies by zone are available in the ONELIX interactive analysis — they complement this aggregated reading without replacing study of underlying indicators.
The ONELIX reading of the LIX
ONELIX reads the LIX as a statistical synthesis of market risk. A high level means several risk families are simultaneously stretched or historically unfavorable.
The reading always remains decomposable: the global score should be compared with underlying indicators, historical drawdowns, observed returns and backtests.
Trend change vs isolated threshold
The LIX becomes especially useful when its trend changes, rather than when it simply reaches a threshold. Historically, a LIX reversal can sometimes accompany or precede a market reversal. This interpretation must remain nuanced: it is not an infallible rule, and it does not constitute investment advice.
A LIX that remains elevated for months without reversing may signal persistent tension without precise timing. Conversely, a rapid rise from a low zone can be more informative than an already-known absolute level.
Reversals and regimes
Bidirectional LIX reading — vigilance in high zones, statistically more favorable context in low zones — is developed in the pillar guide on market risk. Three typical movements observed since 1962:
| Movement | Editorial reading | Historical example |
|---|---|---|
| LIX ↓ after peak | Easing vigilance context | Post-dot-com: 96% (Jun 2000) → 36% (Dec 2002) |
| LIX ↑ after trough | Context tightening; possible end of euphoria | 2013–2021: gradual rise toward 89% |
| LIX ↑ post-crash | Recovery: stress dissipating then cycle | COVID: 43.8% (Mar 2020) → rise during 2020–21 bull run |
These examples illustrate past regimes. They are not a mechanical rule or investment advice.
The dashboard displays the current score, history and zones. Interactive analysis details drawdowns, frequencies and returns by level. The ONELIX methodology specifies statistical limits.
View the LIX in ONELIX
Access the score, charts, historical zones, drawdown statistics, returns and backtests in the application.
Limits and vigilance points
A composite score simplifies a complex reality. Two periods with a similar LIX can be made of different underlying signals.
- Imprecise timing: the LIX may remain elevated for months before a correction.
- Exogenous crises: does not predict external shocks (wars, pandemics, etc.).
- Exceptional interventions: extraordinary central bank measures can delay corrections.
- Decomposable reading: understanding components and the limits of each indicator remains essential.
A high LIX indicates increased vigilance, not certainty of an immediate decline.
Frequently asked questions
What does the LIX measure?
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.
Does the LIX predict crashes?
No. It contextualizes statistical and historical risk, without a correction calendar.
How should a high LIX be interpreted?
According to historical data, several indicators simultaneously show precursor signs of corrections, without indicating a precise signal or market reversal timing.
Is it a proprietary indicator?
Yes. General steps are documented, but weights, temporal smoothing and aggregation parameters remain proprietary.
Should level or trend be prioritized?
Trend. The LIX is more informative when its direction changes than when it simply reaches an isolated threshold.
Does the LIX signal a favorable context for equities?
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.
What does a LIX decline toward a low (SERENE) zone mean?
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.