CMT Level 1 - Sample Questions Flashcards - Quizlet

10/11/21, 4:29 PM CMT Level 1 - Sample Questions Flashcards | Quizlet
CMT Level 1 - Sample Questions

Terms in this set (137)
Cycles are GENERALLY Answer: b. Low to low
measured

a. High to low
Reference: Dahlquist, Julie R., and Charles D.
b. Low to low
Kirkpatrick. Technical Analysis: The Complete
c. High to high
Resource for Financial Market Technicians.
d. Either b or c Chapter 19.
This cycle principle states as Answer: b. Variation
stocks go through similar
cycles, the size and Reference: Dahlquist, Julie R., and Charles D.
magnitude will differ.
a. Commonality
Chapter 19.
b. Variation
c. Summation
d. Proportionality

https://quizlet.com/24959673/cmt-level-1-sample-questions-flash-cards/ 1/50
In regards to cycle analysis, Answer: c. Useful in checking where the trend

translation is:
direction is headed or if it is changing
a. Distance between troughs

b. Distance between peaks
c. Useful in checking where Resource for Financial Market Technicians.
the trend direction is headed Chapter 19.
or if it is changing
d. To the left when the peak is

beyond the halfway point
Which would be the MOST Answer: a. Phase
useful aspect of a cycle in
studying the relationship Reference: Dahlquist, Julie R., and Charles D.

between cycles of different Kirkpatrick. Technical Analysis: The Complete
lengths?
Chapter 19.
a. Phase
b. Period
c. Amplitude
d. None of the above
A complete Elliott wave cycle Answer: c. 8
is made up of how many
waves?
a. 5
b. 3
Chapter 20.
c. 8
d. 13

When analyzing long term Answer: b. Logarithmic chart
price movements, it could be
helpful to use which type of Reference: Dahlquist, Julie R., and Charles D.
chart?
a. Candle chart
Chapter 11.
b. Logarithmic chart
c. Bar chart
d. Point and figure chart
In a normal 5-wave Elliott Answer: a. 3rd
impulse wave, which wave is
USUALLY expected to be the Reference: Dahlquist, Julie R., and Charles D.

longest and most dynamic?
a. 3rd
Chapter 20.
b. 5th
c. 1st
d. 1st but sometimes 3rd
Which of the following would Answer: d. Flag
MOST likely be a continuation
pattern?
Reference: Edwards, Robert D. and Magee, John,
Technical Analysis of Stock Trends, 9th Edition.
a. Engulfing pattern
Chapter 11.
b. Head and shoulders
c. Double bottom
d. Flag

Which of the following would Answer: d. All the above are considered to be
NOT be considered a support support levels
level?


a. Previous high
b. Previous low
Chapter 13.
c. Trading range
d. All the above are

considered to be support
levels
According to Robert Rhea's Answer: c. I, II, and III
hypotheses:

I. The primary trend is Reference: Dahlquist, Julie R., and Charles D.

inviolate
II. The averages discount Resource for Financial Market Technicians.
everything
Chapter 6.
III. Dow Theory is not infallible
IV. Dow Theory is predictable
a. I and II
b. I and III
c. I, II, and III
d. I, II, III, and IV
For a breakout or breakdown Answer: c. Three-quarters
from a triangle to be
considered valid it should Reference: Dahlquist, Julie R., and Charles D.

occur NO MORE than _______ of Kirkpatrick. Technical Analysis: The Complete
the distance to the apex from Resource for Financial Market Technicians.
the beginning of the pattern?
Chapter 15.
a. One-half
b. Two-thirds
c. Three-quarters
d. Five-sixths
What is indicated when Answer: d. A stock's volatility has decreased
Bollinger Bands narrow?


a. A stock is ready for a rally
b. A stock is ready for a Resource for Financial Market Technicians.
decline
Chapter 14.
c. A stock's volatility has
increased
d. A stock's volatility has

decreased
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In the Dow Theory, the MOST Answer: d. Close
important price is the


a. Open
b. High
c. Low
Chapter 6.
d. Close

Which is/are considered Answer: d. All the above
important in determining the
validity of a trendline break?

a. Time
b. Price
Chapter 13.
c. Volume
d. All of the above
Which BEST characterizes Answer: a. There is sideways price action
continuation patterns?


a. There is sideways price Kirkpatrick. Technical Analysis: The Complete
action
b. They take a long time to Chapter 17.
form
c. They usually represent

long-term patterns
d. They signal the start of a

new trend
Which is NOT true of a buying Answer: a. Prices fall sharply at first
climax?


a. Prices fall sharply at first
b. Volume is very heavy
c. The close is near the low Chapter 15.
end of the daily range
d. Prices initially rise sharply

In order for a Dow Theory sell Answer: d. b and c
signal to be confirmed


a. The Dow Jones Industrials Kirkpatrick. Technical Analysis: The Complete
(DJI) and the Dow Transports Resource for Financial Market Technicians.
(DJT) must peak Chapter 6.
simultaneously
b. The DJI and DJT must fail to

confirm at the highs
c. Both the DJI and DJT must

break below an important
intermediate term support
level
d. b and c
The Dow Theory uses ONLY

Answer: c. Closing prices
a. High prices
b. Low prices
c. Closing prices
d. All of the above Chapter 6.
A company whose stock is in Answer: b. Market discounting
a well-established uptrend
reports earnings slightly Reference: Pring, Martin J. Technical Analysis

above consensus estimates. Explained. Chapter 26.
After an initial rally, the stock
then ends lower on the day.
This would PROBABLY be an
example of...
a. Investor ennui
b. Market discounting
c. Unrealistic expectations
d. A short-coming of
fundamental analysis

Point and figure charts are Answer: b. Identifying areas of accumulation or

LEAST suited to
distribution
a. Establishing targets
Reference: du Plessis, Jeremy. The Definitive Guide
b. Identifying areas of to Point and Figure. Chapter 1
accumulation or distribution
c. Identifying areas of support

and resistance
d. Identifying breakouts
In a doji candlestick
Answer: c. Supply and demand are in balance
a. Supply exceeds demand

b. Demand exceeds supply
c. Supply and demand are in Resource for Financial Market Technicians.
balance
Chapter 17.
d. All the above
Which of the following IS a Answer: a. 50%
Fibonacci ratio?


a. 50%
b. 75%
c. 33%
Chapter 20.
d. 66%

When using a moving average Answer: c. The fast falls below the slow
crossover system to generate
buy/sell signals, a SELL signal Reference: Pring, Martin J. Technical Analysis

would be generated when
Explained. Chapter 9.
a. The slower moving average

falls below the faster average
b. The slow rises above the

fast
c. The fast falls below the

slow
d. Either a or c
Moving averages are of LEAST Answer: a. A sideways trend
use in generating buy or sell
signals in
Reference: Pring, Martin J. Technical Analysis
a. A sideways trend
b. A moderately sloping
uptrend
c. A steep downtrend
d. Not especially useful in any

of them
A stock trades in a range Answer: d. There would be no count
between 51 and 55 for 10 days
and then moves higher. If you Reference: du Plessis, Jeremy. The Definitive Guide
have been charting the stock to Point and Figure. Chapter 4.
with a 3 box reversal point
and figure chart, with 2 points
assigned per box, what would
the horizontal count be?
a. 30 points
b. 10 points
c. 60 points
d. There would be no count

On balance volume is USEFUL Answer: d. All the above
to


a. Confirm price
to Point and Figure. Chapter 4.
b. Spot divergence
c. Clarify volume trends
d. All the above
Common filters used to Answer: d. All the above
confirm a trendline break
INCLUDE
a. Penetration above/below Resource for Financial Market Technicians.
the trendline by a set Chapter 13.
percentage
b. A pre-defined period of
time during which prices stay
above/ below the trendline
c. A close above/below the

trendline
d. All the above
As a general rule, in Answer: b. Decreases as the pattern develops
rectangle, triangle, flag and
pennant patterns, volume Reference: Pring, Martin J. Technical Analysis

GENERALLY
a. Increases as the pattern

develops
b. Decreases as the pattern

develops
c. Stays constant as the

pattern develops
d. Shows signs of
accumulation

Which type of gap is LEAST Answer: b. Breakaway
likely to be filled when it
occurs with high volume?

a. Common
b. Breakaway
c. Exhaustion
d. Runaway
Which of the following Answer: b. 45%
percentage parameters is
NOT a widely recognized Reference: Dahlquist, Julie R., and Charles D.

percentage retracement?
a. 66%
Chapter 13.
b. 45%
c. 50%
d. 33%
What is intermarket analysis?

Answer: a. Study of the interrelationships between
the various independent financial markets
a. Study of the
interrelationships between the Reference: Dahlquist, Julie R., and Charles D.

various independent financial Kirkpatrick. Technical Analysis: The Complete
markets
b. Study of the internals of the Chapter 21.
various financial markets
c. Study of the various

international financial markets
and how they influence each
other

The secondary trend is Answer: b. Weeks or months; weeks or months
measured in __________, and the
intermediate trend is Reference: Dahlquist, Julie R., and Charles D.

measured in __________.
a. Months or years; days or Chapter 6.
weeks
b. Weeks or months; weeks or

months
c. Days or weeks; intraday

minutes
d. Intraday minutes; weeks

and months
How would you use relative Answer: c. Divide the price of one sector by an
strength analysis when industry benchmark and compare
comparing sectors?


a. Compare RSIs - the higher Kirkpatrick. Technical Analysis: The Complete
the number, the more bullish Resource for Financial Market Technicians.
the sector
Chapter 21.
b. Divide the price of one
sector by another and
compare
c. Divide the price of one

sector by an industry
benchmark and compare
d. We don't compare sectors,

we compare industry groups

To INCREASE the sensitivity Answer: b. Decrease the box size
of a 5 x 3 point and figure
chart, one would

a. Increase the box size
b. Decrease the box size
c. Increase the number of

boxes needed for a reversal
d. Both a and c
In point and figure charting, Answer: a. One box reversal chart
the ability to obtain price
objectives through use of the Reference: du Plessis, Jeremy. The Definitive Guide
horizontal count is a principal to Point and Figure. Chapter 4.
advantage of the
a. One box reversal chart
b. Three box reversal chart
c. Five box reversal chart
d. All of the above
In what charting technique Answer: d. Simplified three box point and figure
will trendlines ONLY be drawn charts
at 45 degree angles?


a. Bar charts
b. Candlestick charts
c. Swing charts
d. Simplified three box point

and figure charts

What pattern is found in point Answer: b. Head and shoulders
and figure charts?


a. Doji
c. Island reversal
d. All of the above
Using intraday 1x1 point and Answer: c. A breakout from a 15 column

figure charts, which breakout congestion zone
is MOST significant?


a. A breakout from a 5 column to Point and Figure. Chapter 1.
congestion zone
b. A breakout from a 10
column congestion zone
c. A breakout from a 15
column congestion zone
d. The breakouts are of equal

significance
Cycles are USUALLY Answer: b. Trough to trough
measured from


a. Crest to crest
b. Trough to trough
c. Wheel to wheel
Chapter 19.
d. Curl to curl

The following is NOT common Answer: c. Tops usually take longer to form than
of reversal patterns
bottoms
a. The existence of a prior Reference: Edwards, Robert D. and Magee, John,

trend
b. The larger the pattern the Chapter 6.
greater the subsequent move
c. Tops usually take longer to

form than bottoms
d. The break of a major

trendline
An inverse head and Answer: c. A reversal pattern
shoulders pattern is


a. A topping pattern
b. Generally unreliable
Chapter 6.
c. A reversal pattern
d. a and b
The MAXIMUM objective of Answer: d. 100% retracement
reversal patterns is


a. 50% retracement
b. 66% retracement
Chapter 6.
c. .618 of the current price
d. 100% retracement

Which is TRUE of double tops

Answer: d. Height is often used as a measuring
objective
a. There are two identifiable
peaks at very different price Reference: Pring, Martin J. Technical Analysis

levels
b. Volume is lighter during the
first peak
c. They often occur at market

bottoms
d. Height is often used as a

measuring objective
Which of the following Answer: a. An investor invests the same dollar

describes an equally amount in each security
weighted average?


a. An investor invests the same Kirkpatrick. Technical Analysis: The Complete
dollar amount in each security
b. Is adjusted by a divisor
Chapter 5.
c. Considers the market
capitalization of each security
in the average
d. Is the way the Dow Jones

Industrial Average is
calculated

A REASONABLE price Answer: c. Equivalent to the distance between the

objective once a stock has head and neckline
completed a head and
shoulders pattern is
Reference: Edwards, Robert D. and Magee, John.
Technical Analysis of Stock Trends, 9th
a. 100% of the previous trend
Edition.Chapter 6.
b. Derived using the Fibonacci
Ratio
c. Equivalent to the distance

between the head and
neckline
d. Depends on the action of

the accompanying volume
A continuation pattern is
Answer d. All of the above
a. A pause in the prevailing Reference: Dahlquist, Julie R., and Charles D.

trend
b. Usually a sideways price Resource for Financial Market Technicians.
action
Chapter 15
c. Usually a near term or
intermediate term pattern
d. All of the above
A symmetrical triangle is
a. Also called a coil

b. Usually a continuation Kirkpatrick. Technical Analysis: The Complete
pattern
c. A temporary pause in the Chapter 15
existing trend
d. All of the above

The apex of a triangular Answer d. All of the above
pattern is


a. The point where two lines Kirkpatrick. Technical Analysis: The Complete
meet
b. A point that helps to time Chapter 15
and measure the potency of
the pattern
c. An important support or
resistance level after the
breakout occurs
d. All of the above
Volume should diminish Answer a. True
during the price swings within
a triangular pattern
a. True
b. False
Chapter 15
c. Sometimes
d. Only on the downside

swings
The breakout from a triangle Answer: d. All of the above
formation


a. Should take place with a Kirkpatrick. Technical Analysis: The Complete
sharp increase in volume
b. Should take place between Chapter 15
two-thirds to three-fourths of
the way through the pattern
c. Is a price level that

immediately becomes
support/resistance
d. All of the above

The descending triangle is just Answer d. b and c
a mirror image of the
ascending triangle and is Reference: Dahlquist, Julie R., and Charles D.

generally considered a ______ Kirkpatrick. Technical Analysis: The Complete
pattern
Chapter 15
a. Bullish
b. Bearish
c. Continuation
d. b and c
All of the following are true of Answer d. They are reversal patterns
flag and pennant patterns
EXCEPT
a. They are short term Resource for Financial Market Technicians.
patterns completed in one to Chapter 5
two weeks
b. They are preceded by

sharp and nearly straight line
moves
c. They are characterized by a

decrease of volume during
the formation of the pattern
d. They are reversal patterns
The measuring technique for Answer b. Height
MOST continuation patterns
implies that a price objective Reference: Pring, Martin J. Technical Analysis

from the breakout point is Explained. Chapter 5
equal to the ____ of the pattern
at its broadest point
a. Width
b. Height
c. None of the above
d. 100% of prior trend

The reversal pattern that can Answer b. Head and shoulders
also appear as a continuation
pattern is
a. Saucer
Chapter 6
c. Spike
d. Double top
Stock traders rely heavily on

Answer d. b and c
a. 4 and 92 day moving Reference: Pring, Martin J. Technical Analysis

averages
Explained. Chapter 9. Dahlquist, Julie R., and
b. 50 and 200 day moving Charles D. Kirkpatrick. Technical Analysis: The
averages
Complete Resource for Financial Market
c. 30 and 40 week moving Technicians. Chapter 14
averages
d. b and c
A Channel breakout system Answer: d. a and c
works extremely well in


a. Trending markets
b. Non-trending markets
c. Daily and weekly charts and Chapter 12
monthly charts
d. a and c
The moving average

Answer: d. All of the above
a. Follows the trend

b. Is a smoothing device Kirkpatrick. Technical Analysis: The Complete
c. Lags market action
d. All of the above Chapter 14

The "crossover method" refers Answer c. A buy or sell signal generated when a
to
shorter moving average
crosses a longer moving average
a. Buying the same security
high and selling it low twice in Reference: Dahlquist, Julie R., and Charles D.
the same day
b. Taking the buy/sell Resource for Financial Market Technicians.
recommendations of a Chapter 14
fundamental analyst
c. A buy or sell signal

generated when a shorter
moving average
crosses a longer moving

average
d. a and b
The most commonly used Answer d. Close
price to calculate the moving
average is the
a. High
b. Low
Chapter 14
c. Midpoint
d. Close
In a 10-day simple moving Answer c. 10%
average, each day's price is
assigned a weighting of
a. 1%
b. 5%
Chapter 14
c. 10%
d. 20%

Which moving average(s) Answer d. b and c
assign GREATER weight to the
most recent data?

a. Simple
b. Weighted
Chapter 14
c. Exponential
d. b and c
Longer-term moving averages

Answer d. a and c
a. Give fewer buy and sell Reference: Dahlquist, Julie R., and Charles D.
signals
b. Are better at giving signals Resource for Financial Market Technicians.
at major tops
Chapter 14
c. "Give back" a lot more when
the trend reverses
d. a and c
Shorter moving averages

Answer a. Produce more trades
a. Produce more trades

b. Produce fewer whipsaws
c. a and b
d. None of the above Chapter 14
To help confirm a price trend, Answer c. In the direction of the trend
volume should expand


a. On a reversal day
Explained. Chapter 5
b. On a strong close
c. In the direction of the trend
d. When a price target is met

Volume divergence occurs Answer c. A new high in an uptrend takes place on

when
declining volume
a. Volume expands while Reference: Pring, Martin J. Technical Analysis

open interest contracts
b. Volume expands while the
daily trading range contracts
c. A new high in an uptrend

takes place on declining
volume
d. Volume declines during a

sideways congestion pattern
On a head and shoulders top, Answer b. Light volume
the "head" is typically made
on
a. Active volume
Chapter 6
b. Light volume
c. Breakout volume
d. Normal volume
Volume in a head and Answer d. During the left shoulder
shoulders pattern is HIGHEST
where?
a. At the top of the head Chapter 6
b. At the completion of the
head
c. During the right shoulder
d. During the left shoulder

Triangle price patterns should Answer c. A gradual drop-off in volume until the
be accompanied by
breakout
a. Active volume within the Reference: Dahlquist, Julie R., and Charles D.
pattern
b. Heavier volume in the Resource for Financial Market Technicians.
direction of the eventual Chapter 15
breakout
c. A gradual drop-off in
volume until the breakout
d. No discernible difference in
volume until after the
breakout occurs
Technicians believe that

Answer b. Volume precedes price
a. Price precedes volume

b. Volume precedes price
c. Volume and price are
typically coincident indicators
d. Volume matters most

during breakouts
Open interest is
Answer: b. The number of outstanding contracts in
any given day
a. The number of contracts
traded in a day
b. The number of outstanding Kirkpatrick. Technical Analysis: The Complete
contracts in any given day
c. The sum of total volume Chapter 18
and open interest

The primary use of Answer c. Strengthen the possibility of a reversal

candlestick patterns is to
or continuation of a price trend
a. Define the intermediate and Reference: Dahlquist, Julie R., and Charles D.
short-term trends, but not the Kirkpatrick. Technical Analysis: The Complete
primary trend
b. Define the primary, Chapter 17
intermediate, and short-term
trends
c. Strengthen the possibility of

a reversal or continuation of a
price trend
d. Determine if you are in a

bull market or a bear market
Which is an example of Answer c. Using western techniques to confirm a

candle pattern filtering?
candle pattern
a. Accepting only those Reference: Dahlquist, Julie R., and Charles D.

patterns that fit the strict Kirkpatrick. Technical Analysis: The Complete
definition of their pattern
b. Accepting only those Chapter 11
patterns that are confirmed
by the intermediate trend
c. Using western techniques

to confirm a candle pattern
d. Using cycles to confirm the

existence of a pattern
Which tools could you use in Answer c. RSI and MACD
candle pattern filtering?


a. Cycles
b. Point and Figure chart
c. RSI and MACD
Chapter 17
d. Dow Theory

The analysis of cycles Answer b. An indication of time duration of a trend
provides


a. An objective determination Explained. Chapter 21
of trend reversal
b. An indication of time
duration of a trend
c. Relative strength of related

price indices
d. An approximation of price
support
For a futures contract, daily Answer c. The number of contracts traded during
volume represents
the day
a. The dollar volume of the Reference: Dahlquist, Julie R., and Charles D.
contracts traded
b. The cumulative price Resource for Financial Market Technicians.
change for the day
Chapter 18
c. The number of contracts
traded during the day
d. The open interest at the

end of the day
Flow of fund analysis relies in Answer: d. On measuring the cash position of

part
different investor groups
a. On the sentiment of Reference: Dahlquist, Julie R., and Charles D.

investment advisory services
b. On monthly price Resource for Financial Market Technicians.
movements of the Dow Jones Chapter 10
Industrial Average
c. On market volume statistics
d. On measuring the cash

position of different investor
groups

A momentum index measures

Answer c. The rate of change of prices
a. Investor sentiment
b. Investor psychology
c. The rate of change of Resource for Financial Market Technicians.
prices
Chapter 18
d. Absolute volume level
The simple moving average

Answer a. Gives equal weight to each periods
price
a. Gives equal weight to each
periods price
b. Gives greater weight to the Kirkpatrick. Technical Analysis: The Complete
more recent price
c. Assigns greater weight to Chapter 14
more recent data and
includes all of the data in the
life of the instrument
The objective of the Dow Answer c. The primary direction of the stock
Theory is to determine
market
a. Changes in market Reference: Dahlquist, Julie R., and Charles D.

psychology Kirkpatrick. Technical Analysis: The Complete
b. The likelihood of volume Resource for Financial Market Technicians.
reversals
Chapter 6
c. The primary direction of the
stock market
d. Timing of market bottoms

Oscillators are normally used Answer: a. Identify overbought or oversold market

to
conditions
a. Identify overbought or Reference: Dahlquist, Julie R., and Charles D.

oversold market conditions
b. Identify price/volume Resource for Financial Market Technicians.
divergences
Chapters 8 and 18
c. Identify Elliott Wave cycles
d. Gauge differentials
between buyers and sellers
Relative strength analysis, as Answer c. Changes in security prices in relation to

applied in equity analysis other security prices, group price indices or
relates
market action
a. Volume changes to price Reference: Dahlquist, Julie R., and Charles D.

changes
b. Unsophisticated investor Resource for Financial Market Technicians.
behavior to price cycles
Chapter 18
c. Changes in security prices
in relation to other security
prices, group price indices or
market action
d. Rate of price change of 4,

13 and 42 weeks

The resistance level of a price Answer b. The level over the market where selling
trend refers to
pressure is
sufficiently strong to overcome buying pressure

a. The level under the market and a price
where buying interest is

advance is expected to be turned back
sufficiently strong to
overcome selling pressure

b. The level over the market Kirkpatrick. Technical Analysis: The Complete
where selling pressure is
sufficiently strong to Chapter 12
overcome buying pressure
and a price advance is
expected to be turned back
c. The boundaries of the

trading range of the trend
d. The target price indicated

by the count
To measure an overbought or Answer d. Look for price and volume divergences
oversold market level, a
technical analyst would Reference: Dahlquist, Julie R., and Charles D.

normally
a. Look for moving average Chapter 18
crossovers
b. Look for a series of

exhaustion gaps
c. Use one or more price

oscillators
d. Look for price and volume

divergences

Accumulation normally Answer a. Near a market bottom
occurs


a. Near a market bottom
b. Near a market top
c. In declining markets
d. After a completed trading

range
The Kondratieff cycle extends Answer d. 54 years
for a period of about


a. 13 weeks
b. 13 years
c. 54 weeks
Chapter 19
d. 54 years
The Public/Specialist Short Answer: a. Shows the difference between

Sales Ratio is used as a tool sophisticated money and unsophisticated money
that


a. Shows the difference Explained. Chapter 26
between sophisticated money
and unsophisticated money
b. Shows the growth in money

flow produced by NYSE
specialists
c. Measures contrary opinion
d. Has become obsolete due

to derivative product trading

Blow-offs are identified Answer b. By observing a sharp rally in prices after

a long advance accompanied by a sharp increase
a. Near market bottoms
in trading activity
b. By observing a sharp rally
in prices after a long advance Reference: Edwards, Robert D. and Magee, John.
accompanied by a sharp Technical Analysis of Stock Trends, 9th
increase in trading activity
Edition.Chapter 10.1
c. By observing a sudden
sharp drop in prices after a
long decline accompanied by
heavy trading activity
d. Using techniques of cycle

analysis
A selling climax
Answer b. Typically occurs at a market bottom
a. Typically occurs at a market Reference: Edwards, Robert D. and Magee, John.

top
b. Typically occurs at a market Edition.Chapter 10.
bottom
c. Is accompanied by average
to low volume
d. Indicates new shorts

getting trapped at the bottom
A breakaway gap usually

Answer: b. Signals the beginning of an important
price move
a. Occurs during the
accumulation phase of a Reference: Edwards, Robert D. and Magee, John.

market cycle
b. Signals the beginning of an Edition.Chapter 12
important price move
c. Provides a major
divergence signal
d. Occurs at the end of an

important price move

Price cycles are normally Answer d. All of the above
measured by


a. Their amplitude
b. Their period
c. Their phase
d. All of the above
During a consolidation, price Answer b. Moves within well defined neutral

action normally
boundaries on moderate or less than moderate
volume
a. Reverses decisively in one
direction on heavy volume

b. Moves within well defined Technical Analysis of Stock Trends, 9th Edition.
neutral boundaries on Chapters 8 & 9
moderate or less than
moderate volume
c. Retraces one third of its

previous price movement
d. Diverges from volume
Contrary opinion is usually

Answer c. Considered to be a gauge of investor
psychology
a. Ignored

b. Measured by observing Reference: Pring, Martin J. Technical Analysis

price cycles and volume Explained. Chapter 26
patterns
c. Considered to be a gauge
of investor psychology
d. A bullish indicator

Moving average crossovers Answer a. Buy and sell signals
can be used to indicate


a. Buy and sell signals
b. Positive relative strength
c. Negative volume
d. Trend divergence
Which of the following can be Answer d. All of the above
considered a sentiment
indicator
a. Specialist Short Sales Ratio
Resource for Financial Market Technicians Chapter
b. Mutual Fund Cash/Asset 12
Ratio
c. Odd Lot Purchase/Sales

Ratio
d. All of the above
Speed resistance lines

a. Divide a trend in thirds

b. Measure the rate of ascent Technical Analysis of Stock Trends, 9th Edition.
or descent of a trend
Chapter 12
c. Are used to measure
percentage retracements
d. All of the above

An exhaustion gap is Answer c. Near the end of a major price move
observed


a. In the beginning stage of a Kirkpatrick. Technical Analysis: The Complete
bear market
b. After prices have moved Chapter 11
sideways for an extended
period of time
c. Near the end of a major

price move
d. With light trading volume
On a daily bar chart

a. Each day's price action is Reference: Pring, Martin J. Technical Analysis

represented by a vertical bar; Explained. Chapter 10
the daily high, low and close
are plotted
b. Prices are plotted vertically,

time horizontally
c. The price scale may be

either arithmetic or
logarithmic
d. All of the above
An appropriate time interval Answer c. Monthly
selection for a bar chart which
is designed to show very Reference: Dahlquist, Julie R., and Charles D.

long-term trends would be
a. Daily
Chapter 23
b. Weekly
c. Monthly
d. Annually

Risk can be defined as:

a. Variability of returns
b. Amount of loss per trade
to Point and Figure. Chapter 2
c. Beta
d. All of the above
A point & figure chart Answer a. A new plot on a point and figure chart is
DIFFERS from a bar chart as
made only when the price changes by a given
amount
a. A new plot on a point and
figure chart is made only Reference: du Plessis, Jeremy. The Definitive Guide
when the price changes by a to Point and Figure. Chapter 2
given amount
b. Time intervals are clearly

shown in a point and figure
chart
c. Point and figure charts are

only concerned with
measuring price momentum
d. A new plot on a bar chart is

made only when the price
changes by a given amount

In constructing a point and Answer b. The price has moved by equal to or

figure chart, a new box is more than the specified box size
added ONLY when


a. The price has moved by to Point and Figure. Chapter 2
less than the specified box
size
b. The price has moved by

equal to or more than the
specified box size
c. The volume confirms the

price movement
d. The price has moved to a

new high
As the price unit of a reversal Answer c. The detail of price movement

on a point and figure chart is graphically displayed is increased
decreased


a. Time analysis becomes Kirkpatrick. Technical Analysis: The Complete
more critical for interpretation
b. The detail of price Chapter 17
movement graphically
displayed is decreased
c. The detail of price

movement graphically
displayed is increased
d. The possibility of whipsaws

decreases

The body of the candlestick Answer d. The current session's open and close
line displays the relationship
between:
a. The current session's high Resource for Financial Market Technicians.
and low
Chapter 17
b. The current session's close
and the prior session's close
c. The current session's open

and high
d. The current session's open

and close
The basic concept behind the Answer d. A trend in motion will remain in motion
use of a trendline is that
until it reverses
a. Price and volume tend to Reference: Dahlquist, Julie R., and Charles D.
confirm each other
b. Prices rise and fall in Resource for Financial Market Technicians.
cyclical patterns
Chapter 2
c. Prices follow a natural
rhythm
d. A trend in motion will

remain in motion until it
reverses

Technical analysts generally Answer b. A price close beyond the trendline is

believe
more significant than an intra-day penetration
a. That trendline analysis Reference: Dahlquist, Julie R., and Charles D.

cannot be applied to point Kirkpatrick. Technical Analysis: The Complete
and figure charts
b. A price close beyond the Chapter 2
trendline is more significant
than an intra-day penetration
c. Trendlines are useful for

validation of price gaps
d. Price whipsaws can be

avoided using trendlines
In a head and shoulders Answer c. Decreases with each successive peak
pattern, volume usually


a. Is greatest in the middle leg
b. Increases with each Resource for Financial Market Technicians.
successive peak
Chapter 15
c. Decreases with each
successive peak
d. Is constant throughout the

pattern
A simple moving average is Answer c. Equal weight is given to each point

often criticized because
included in the calculation
a. The most recent events are Reference: Pring, Martin J. Technical Analysis
given extra weight
b. The entire price time series
is used in its calculation
c. Equal weight is given to

each point included in the
calculation
d. It is difficult to calculate

An exponentially smoothed Answer b. Gives more weight to more recent

moving average
observations
a. Excludes older price points Reference: Pring, Martin J. Technical Analysis

in the calculation
b. Gives more weight to more
recent observations
c. Cannot be plotted on a bar
chart
Oscillators are used to alert Answer d. Overbought or oversold price

the analyst to
conditions
a. Volume divergences
b. Continuation patterns
c. Extended rallies
d. Overbought or oversold Chapters 8 and 18
price conditions
All the following are Answer a. Advance/decline line
momentum oscillators
EXCEPT
a. Advance/decline line
b. Relative Strength Index Chapter 18
(RSI)
c. Stochastics
d. Moving Average
Convergence/Divergence
(MACD)

Most oscillators are Answer a. So that the mid-point goes through zero
constructed


a. So that the mid-point goes Kirkpatrick. Technical Analysis: The Complete
through zero
b. On a semi-logscale to Chapter 18
highlight momentum
c. So that all points are

positive in value
d. Without an upper boundary
Oscillators are MOST helpful Answer d. Non-trending markets where prices

to gauge price behavior in
fluctuate in a well defined trading range
a. Sharply rising markets

b. Sharply falling markets
c. Sharply rising and sharply Resource for Financial Market Technicians.
falling markets
Chapter 18
d. Non-trending markets
where prices fluctuate in a
well defined trading range
Oscillators are MOST valuable Answer c. Their value reaches an extreme reading
when
near the upper or lower end of their boundaries
a. They are confirmed by Reference: Dahlquist, Julie R., and Charles D.

relative strength measures
b. They are accelerating in Resource for Financial Market Technicians.
trend
Chapter 18
c. Their value reaches an
extreme reading near the
upper or lower end of their
boundaries
d. Evaluated using multiple

moving averages

A typical momentum index is Answer a. Plotting the change in price between

constructed by
the beginning and end of a time interval
a. Plotting the change in price Reference: Dahlquist, Julie R., and Charles D.
between the beginning and Kirkpatrick. Technical Analysis: The Complete
end of a time interval
b. Plotting the difference in Chapter 18
volume between the daily
high price and the daily low
price
c. Plotting cumulative price

between two points
d. Connecting the boxes on a

point and figure chart
Violated support levels Answer c. Become resistance levels on price

typically
bounces
a. Become support levels as Reference: Dahlquist, Julie R., and Charles D.

prices fall lower
b. Are associated with Resource for Financial Market Technicians.
declining price projections
Chapter 12
c. Become resistance levels
on price bounces
d. Indicate an imminent price

reversal
As with trendlines, speed Answer d. Reverse roles once they are broken
resistance lines


a. Can be used in conjunction Kirkpatrick. Technical Analysis: The Complete
with sentiment indicators
b. Indicate the potential for Chapter 12
immediate price reversals
c. Must be confirmed with

volume
d. Reverse roles once they are

CMT
brokenLevel 1 - Sample Questions
Which pairs are not similar?

Answer c. MACD = ROC
a. Stochastics = Williams
b. RSI = MACD Kirkpatrick. Technical Analysis: The Complete
c. MACD = ROC
d. None are similar Chapter 18
A rising relative strength line Answer c. That the stock is performing better than
for a stock in a falling market the market
indicates


a. That price and volume are Kirkpatrick. Technical Analysis: The Complete
diverging
b. That the stock is performing Chapter 21
worse than the market
c. That the stock is performing

better than the market
d. That the stock's price is

rising despite the falling
market
Which set of indicators would Answer b. Oscillators

be MOST helpful in analyzing
trading range markets?

a. Moving averages
b. Oscillators
Chapter 18
c. Cycles
d. Elliott Wave

The four year cycle, also Answer a. Election and pre-election
known as the Presidential
Cycle, realizes the best Reference: Pring, Martin J. Technical Analysis

returns in the stock market to Explained. Chapter 21
be
a. Election and pre-election
b. Mid-term and election
c. Pre-election and post

election
d. Post election and mid-term
Which of the following Answer d. All of the above
indicators are used to
measure market breadth?

a. Cumulative breadth line
b. Advance/decline ratio
Chapter 8
c. McClellan oscillator
d. All of the above
Which of the following is NOT Answer c. The consensus is always wrong
an underlying assumption of
technical analysis?
a. Prices move in trends
b. Price discounts everything
Chapter 2
c. The consensus is always
wrong
d. Supply and demand

determines price

Which of the following would Answer: c. Relative strength lines
NOT be considered a means
of identifying a trend?
a. Regression lines
b. Trendlines
Chapter 12
c. Relative strength lines
d. Moving averages
When a stock breaks through Answer: d. Any of the above
the bottom of a down sloping
standard deviation channel Reference: Dahlquist, Julie R., and Charles D.

(around a regression line)
a. The stock is oversold
Chapter 12
b. An acceleration of the
trend may be about to occur
c. It is at the limits of normal

distribution
d. Any of the above

Moving averages tend to Answer a. Using a weighted moving average
change direction well after a
peak or trough in price and Reference: Dahlquist, Julie R., and Charles D.
therefore are considered Kirkpatrick. Technical Analysis: The Complete
"late" in changing direction. Resource for Financial Market Technicians.
Which of the following is Chapter 14
generally considered the
MOST effective way to offset
this tendency to lag?
a. Using a weighted moving

average
b. Using an unweighted
moving average
c. Using moving average

crossovers
A descending triangle that Answer b. Continuation pattern
forms in a downtrend would
probably be considered a
a. Reversal pattern
b. Continuation pattern
Chapter 15
c. Either a or b
d. Probably wouldn't be
useful in forecasting the future
direction of the trend

Which of the following is NOT Answer b. A rally that occurs on rising volume
true about volume?
points to a probable trend reversal
a. A rally that develops on Reference: Pring, Martin J. Technical Analysis

declining volume is suspect
Explained. Chapters 22-23
b. A rally that occurs on rising
volume points to a probable
trend reversal
c. Both price and volume can

fall off sharply after a buying
climax
d. A downside break of a
moving average or trendline
should occur on heavy
volume to qualify as a bearish
signal
Which of the following is Answer a. Triangles
LEAST reliable?


a. Triangles
b. Wedges
c. Broadening Formations
d. Pennants
Which of the following is Answer b. It is usually a continuation pattern
LEAST true of a doji pattern?


a. It represents indecision
b. It is usually a continuation
pattern
c. It is usually a reversal
pattern
d. The opening and closing

prices are at identical levels

The January Effect is:

Answer d. B and C
a. As the S&P goes in January, Reference: Dahlquist, Julie R., and Charles D.
so goes the year
b. When small cap stocks are Resource for Financial Market Technicians.
more likely to outperform the Chapter 9
market
c. Has not worked well in

recent years
d. B and C
In a 10-day rate of change Answer a. The ratio would be greater than zero
indicator, if the latest (more
recent) price is higher than Reference: Dahlquist, Julie R., and Charles D.
the price 10 days ago
a. The ratio would be greater Chapter 18
than zero
b. The ratio would be less than

zero
c. The ratio would be equal to

zero
d. The ratio would hold at a

constant until the market
changed trend

An extreme overbought Answer b. Indicates that the rally is strong and will
reading on a momentum probably carry further
indicator in the early stages of
a rally
a. Shows that the market is Resource for Financial Market Technicians.
ready to correct
Chapter 18
b. Indicates that the rally is
strong and will probably carry
further
c. Is a clear indication that the

pace of the rally is about to
slow down
d. Is a clear indication that the

pace of the rally is about to
accelerate
Which statement is true of an Answer d. b and c
uptrending market?


a. Momentum indicators will Kirkpatrick. Technical Analysis: The Complete
tend to hit greater oversold Resource for Financial Market Technicians.
extremes
Chapter 8
b. Momentum indicators will
tend to stay overbought
longer
c. Momentum indicators will

tend to hit greater
overbought extremes than in
a downtrending market
d. b and c

Which would normally be Answer d. Put/call ratios
considered a sentiment
indicator that is MOST useful Reference: Pring, Martin J. Technical Analysis

to traders?
a. Corporate buy backs
b. Price/earnings ratios
c. Insider buying
d. Put/call ratios
Which type of chart is usually Answer c. Point and figure charts
considered BEST suited for
establishing price targets Reference: du Plessis, Jeremy. The Definitive Guide

based on a horizontal to Point and Figure. Chapters 1-2
measurement?
a. Line charts
b. Daily bar charts
c. Point and figure charts
d. Candlestick charts
Contrary opinion is a useful Answer d. It is at turning points where people are

investment tool because
wrong
a. The "little guy" is always Reference: Pring, Martin J. Technical Analysis

wrong
b. Traders are often most
bearish near market tops
c. Institutional investors have

access to better information
d. It is at turning points where

people are wrong

The longest-term trend in the Answer c. Secular
market is the


a. Primary
b. Cyclical
Resource for Financial Market Technicians Chapter
c. Secular
21

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10/11/21, 4:29 PM CMT Level 1 - Sample Questions Flashcards | Quizlet

CMT Level 1 - Sample Questions

Cycles are GENERALLY Answer: b. Low to low

This cycle principle states as Answer: b. Variation

stocks go through similar

CMT Level 1 - Sample Questions

In regards to cycle analysis, Answer: c. Useful in checking where the trend

a. Distance between troughs

d. To the left when the peak is

Which would be the MOST Answer: a. Phase

useful aspect of a cycle in

studying the relationship Reference: Dahlquist, Julie R., and Charles D.

d. None of the above

A complete Elliott wave cycle Answer: c. 8

is made up of how many

CMT Level 1 - Sample Questions

When analyzing long term Answer: b. Logarithmic chart

price movements, it could be

d. Point and figure chart

In a normal 5-wave Elliott Answer: a. 3rd

impulse wave, which wave is

USUALLY expected to be the Reference: Dahlquist, Julie R., and Charles D.

d. 1st but sometimes 3rd

Which of the following would Answer: d. Flag

MOST likely be a continuation

CMT Level 1 - Sample Questions

Reference: Edwards, Robert D. and Magee, John,

d. All the above are

According to Robert Rhea's Answer: c. I, II, and III

I. The primary trend is Reference: Dahlquist, Julie R., and Charles D.

IV. Dow Theory is predictable

c. I, II, and III

d. I, II, III, and IV

For a breakout or breakdown Answer: c. Three-quarters

considered valid it should Reference: Dahlquist, Julie R., and Charles D.

What is indicated when Answer: d. A stock's volatility has decreased

Bollinger Bands narrow?

Reference: Dahlquist, Julie R., and Charles D.

d. A stock's volatility has

Upgrade to remove adverts Only US$3.99/month

In the Dow Theory, the MOST Answer: d. Close

important price is the

Reference: Dahlquist, Julie R., and Charles D.

CMT Level 1 - Sample Questions

Which is/are considered Answer: d. All the above

important in determining the

validity of a trendline break?

d. All of the above

Which BEST characterizes Answer: a. There is sideways price action

Reference: Dahlquist, Julie R., and Charles D.

c. They usually represent

d. They signal the start of a

Which is NOT true of a buying Answer: a. Prices fall sharply at first

Reference: Dahlquist, Julie R., and Charles D.

d. Prices initially rise sharply

CMT Level 1 - Sample Questions

In order for a Dow Theory sell Answer: d. b and c

Reference: Dahlquist, Julie R., and Charles D.