SecurityStockWatch.com 100 Index
Equal-Dollar Weight Index:
Structure and Methodology

We selected an equal-dollar weighted method for the calculation of the SecurityStockWatch.com 100 Index as the best method available for the relatively small size of our Index of 100 stocks.

The weighted-average methods applied to the really broad indexes of today (S&P 500, NASDAQ, and various Russell 000’s), whereby every stock movement only impacts the index by its market capitalization relative to the entire index, is ideal, since no one, or two, or even three big stocks can really distort the average by much.

Our equal-dollar weighted method gives us the ability to monitor the effect of relative sizes of stock prices, but avoids the tyranny of a really large-market cap company or two causing major fluctuations when it or they run counter to the trend of the group.

Our method sets a market value for each company at the same amount. We used $10,000 for each company, which gave us $1 million total market value. Each company is then assigned the number of shares that gives it a $10,000 market value and the calculating begins with assigning each index a starting value of 100, and adjusting it by the impact of closing prices each day.

To keep the indexes from getting out of equilibrium, each is rebalanced quarterly on the third Friday of the quarter-ending month, which coincides with the triple witching of index futures, index options and stock options.

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