We have created three main Market Resilience Indexes (MRI) based on proprietary measures of return acceleration:
The ascending leg of the cycle creates resilience. Resilience is counted and described as being positive or present during the uplegs. For example, when the Macro MRI is trending positive, we say that it is present or positive. When the Exceptional Macro MRI occurs, it is positive and provides resilience.
The effects of the MRI are additive: they reinforce each other when they're moving in the same direction, and they negate each other when they're moving in opposing directions.
We use the percentile levels to describe the levels of the Micro and Macro MRI. Picture these cyclical patterns going back one hundred years for the Dow Jones Industrial Average, there are cycles that move up and down. If we indicate that the current level is at the 90th percentile, you'll have an idea that it's very close to the top of its normal range that has been established over the 100-year period.
If a stock index is at the 10th percentile of the historical Micro MRI cycle and on the upleg of the cycle, we can expect that the stock index will likely experience resilience from the Micro MRI for several weeks as it continues to move higher through the upleg.
If a stock index is at the 90th percentile of historical levels and still in the upleg of the cycle, we can assume that there will be a peak in the Micro MRI in a week or two.