MANNARINO MARKET RISK INDICATOR. By Gregory Mannarino

GAUGING MARKET RISK BY USING A SIMPLE FORMULA INVOLVING THE 10 YEAR YIELD, AND THE DXY/DOLLAR INDEX.

I have come up with an easy way to measure market risk. THE MANNARINO MARKET RISK INDICATOR, MMRI.
Here is how the equation works. If you take the 10yr yield and multiply that by the DXY, then divide that by 1.61 (which is derived from another equation) you get X. The higher X is, the more we need to pay attention to what is going on and adjust our exposure to the stock market in terms of risk.. As examples. Right now this X is roughly in the 80's. This is a low number and represents a low risk for stocks. At the 1987 stock market crash, this number was 488, and at the 08’ meltdown it was nearly 200. The Dot-Com bubble/crash this number was 360 As a general rule, the higher the X in this calculation, the more risk averse we need to be. The MMRI, Mannarino Market Risk Indicator is based on a scale from 50-400.
Here is a general scale of how to gauge risk.
A reading from 50-100 = LOW RISK
A reading from 100-200 = MODERATE RISK
A reading above 200 = HIGH RISK
A reading above 300 = EXTREME RISK.

Gregory Mannarino