## Want to know what the major index is today? First, understand the logic behind the Taiwan Weighted Index

**Taiwan Weighted Index** (also called Taiwan Market Index) is an important indicator reflecting the pulse of the entire Taiwanese stock market. Many investors check "what is the major index today" before the market opens every day. But to truly grasp this index, looking at the number alone is far from enough—you need to understand the calculation logic behind it.

## Which of the two calculation methods for weighted indices is more fair?

Currently, the main methods used for index calculation worldwide fall into two categories:

**Limitations of Price-Weighted Method**

The Dow Jones Industrial Average uses this method. Suppose the market has only two stocks: stock a priced at 450 yuan, stock b at 550 yuan, with a base index set at 100 points. The next day, stock a rises to 550 yuan, and stock b to 600 yuan, causing the index to jump to 115 points.

This approach seems simple, but it has a fatal flaw: **high-priced stocks exert too much influence on the index, while fluctuations in low-priced stocks can be easily masked**. A thousand-yuan stock's percentage increase might be less impactful than the same percentage rise in several hundred-yuan stocks.

**Advantages and Traps of Market Cap-Weighted Method**

The Taiwan Weighted Index and S&P 500 both use market cap weighting, which bases the weight on the total market capitalization of listed companies. The formula for market cap is: **stock price × circulating shares**.

For example, company a has a stock price of 150 yuan and 2000 shares issued, with a market cap of 300,000 yuan; company b has a stock price of 5 yuan and 140,000 shares issued, with a market cap of 700,000 yuan. When the total market cap is 1 million yuan, the index is set at 100 points. One month later, company a's stock drops to 130 yuan (market cap 260,000 yuan), and company b rises to 10 yuan (market cap 1.4 million yuan). The total market cap becomes 1.66 million yuan, and the index rises to 166 points.

While this method is more scientific, **large-cap companies (like TSMC) dominate the index's direction, often overshadowing the performance of small- and mid-cap stocks**.

## Looking at the index also requires examining its components—don't be fooled by illusions

Relying solely on the Taiwan Weighted Index involves several obvious risks:

**Concentration risk**

Because electronics stocks account for over 40% of the Taiwan market, the index trend is often dominated by this sector. Some traditional industries may rise against the trend but are not easily reflected in the overall index.

**Individual stock differences are smoothed out**

The index shows the market average. When the market declines, some companies may still perform well; when the market rises, some stocks may underperform. Blindly following the index can cause you to miss structural opportunities.

**Amplification of emotional volatility**

Speculative sentiment, geopolitical news, or policy changes can trigger irrational market reactions, which are infinitely amplified in the index. When "black swan events" occur (such as an unexpected CEO death or terrorist incidents), technical analysis may temporarily fail.

**Lagging timeliness**

The index is updated periodically, but the market changes rapidly. Relying on the index for decision-making in high-volatility environments may be too slow.

## How to use technical analysis to interpret the Taiwan stock market trend?

Investors often adopt a **top-down** analysis framework: first look at the major index to determine direction, then analyze industries, and finally select individual stocks.

**Step 1: Confirm the trend of the market**

Use trend lines or moving averages to observe the direction. As long as the price stays above an upward-sloping trend line, and each pullback forms a higher low while each rebound makes a new high, the trend is upward. Conversely, the opposite applies.

**Step 2: Identify support and resistance levels**

Support levels are price zones where buyers are willing to enter; if the price breaks below support, it may accelerate downward. Resistance levels are areas where sellers are concentrated; breaking through resistance signals a bullish trend. These levels usually correspond to previous highs and lows.

**Step 3: Interpret candlestick signals**

Candlesticks reflect four key data points: open, close, high, and low. For example, if after opening, buying pressure pushes the price to the high of the day, but later selling pressure increases and the close is near the low (though still above the open), it indicates **strong buying at the start but eventual selling dominance**. Observing the length of the real body and the position of shadows reveals the ebb and flow of supply and demand.

## Practical ways to invest in the Taiwan stock market index?

**The most common method is through ETFs**

Passive ETFs replicate the index components fully, requiring no active stock picking by fund managers, resulting in low costs and relatively moderate risk, but returns may not be spectacular. Advanced investors can also use Taiwan stock index futures for arbitrage or hedging.

**Pre-investment homework**

1. **Assess risk tolerance** — all investments carry the risk of loss; understand how much volatility you can endure
2. **Research component stock weights** — monitor major stocks like TSMC, MediaTek; their movements can significantly impact the index
3. **Know trading hours** — Taiwan Stock Exchange operates Monday to Friday, 9:00 AM to 1:30 PM (GMT+8). Overseas investors should be aware of time differences
4. **Monitor macroeconomic indicators** — keep an eye on GDP growth, central bank interest rate policies, inflation data; these macro factors deeply influence the stock market

## Summary

To answer "what is the major index today," looking at a single number is limited. Understanding the composition logic of the index, recognizing the concentration risk from market cap weighting, and learning to use technical analysis tools to judge trends—these are the fundamentals of becoming a savvy investor. Use the index as a reference but not the sole basis for decision-making; combine it with fundamental analysis of individual stocks and industry prospects to succeed in the stock market.