Create your own index

[maninjapan]

I'm looking at creating a group of original market indices for my own analysis. The question I have is what would be the best way to calculate them. They need to not only be accurate in regards to current prices, but I also need to be confident that the historical prices are also accurate which makes me wary of using anything that calculates based on fundamental data as I dont think I have enough to produce a consistantly accurate index.
Obviously I could just use a purely price based calculation but I was wondering if there are any other alternatives.... any ideas anyone?

 

[nazzdack]

Quote from maninjapan:
I'm looking at creating a group of original market indices for my own analysis.

If your new "index" correlates too closely to generally accepted benchmark indices, then you're wasting your time trying to create a "Holy Grail" indicator. Stick with the S&P-500.

 

[Eight]

Wyckoff wrote a book a long time ago. He talked about how to formulate mini-indexes for your stock analysis, it's a great book all around.

 

[maninjapan]

nazzdack, your definately right there. Although Im not interested in trying to reinvent the wheel, nor am I trying to create any holy Grail. Just trying to create some more specific industry based indices that track my interests a little more accurately than whats out there.

I think that indices weighted by Market cap are the way to go, however I dont have the historical data to back it up an fundamental data calculations