CMT LEVEL 1 EXAM PREP 2026 TESTED
QUESTIONS AND ANSWERS GRADED A+
◉ Uptrend. Answer: Prices reach higher peaks and the troughs are also
higher. Downtrend is the opposite.
◉ Trend. Answer: directional movement of prices that remains in effect
long enough to be identified and still be profitable
◉ Supply and Demand. Answer: key for pricing. Believes it is futile to
analyze components of supply and demand except through the prices it
creates. Prices determine trends and they tend to trend.
◉ Fractal nature. Answer: ability for trends to act similarly over
different periods
◉ period of interest. Answer: the length of the trend
◉ Trends Identification categories. Answer: Primary = years/months
Secondary (Int.) = Months/weeks
Short term = days
,Intraday = hours/mins
◉ Prices discount everything. Answer: includes all information
known/unknown/feelings/etc.
◉ Technicians Assumptions. Answer: 1) Supply & demand
2) Price discounts everything
3) Prices are nonrandom
4) Humans will behave similarly to the way they have in the past
5) Believe patterns are fractal
6) Emotions are affected by earlier emotions through emotional
feedback
◉ Technical analysis excessive feedback. Answer: prices will expand
beyond equilibrium for emotional reasons, revert to the mean, and then
expand beyond the mean in the opposite direction with investor
sentiment
◉ Primary Bull Phases. Answer: 1) Reviving confidence from primary
bear market
2) Response to increase corporate earnings
3) Speculation becomes dominant and prices rise on hopes
, ◉ Primary BEAR phases. Answer: 1) Abandonment of hopes from
which stocks were purchased
2) Selling due to decreased earnings
3) Distress selling, regardless of value
◉ The Secondary Trend. Answer: Usually lasting from 3 weeks to as
many months, during which intervals of price movement generally
retraces from 33% to 66% of primary price change since end of last
secondary reaction
◉ Line. Answer: 2-3 weeks of horizontal price movement in an average
w/in a 5% range. usually a sign of accumulation or distribution.
Breakout above or below suggest it will continue in same direction as
breakout
◉ concept of confirmation. Answer: downward movement of secondary
and perhaps primary was established when the new lows for both
averages were under the low points of the proceeding reaction.
◉ S&P 500 and Russell 2000. Answer: when the 2 indexes confirm each
other than the primary trend is confirmed
◉ Volume. Answer: Price trend and confirmation override any
consideration on volume. Important on secondary moves. Bull markets
end in periods of excessive activity and begin with light transactions
QUESTIONS AND ANSWERS GRADED A+
◉ Uptrend. Answer: Prices reach higher peaks and the troughs are also
higher. Downtrend is the opposite.
◉ Trend. Answer: directional movement of prices that remains in effect
long enough to be identified and still be profitable
◉ Supply and Demand. Answer: key for pricing. Believes it is futile to
analyze components of supply and demand except through the prices it
creates. Prices determine trends and they tend to trend.
◉ Fractal nature. Answer: ability for trends to act similarly over
different periods
◉ period of interest. Answer: the length of the trend
◉ Trends Identification categories. Answer: Primary = years/months
Secondary (Int.) = Months/weeks
Short term = days
,Intraday = hours/mins
◉ Prices discount everything. Answer: includes all information
known/unknown/feelings/etc.
◉ Technicians Assumptions. Answer: 1) Supply & demand
2) Price discounts everything
3) Prices are nonrandom
4) Humans will behave similarly to the way they have in the past
5) Believe patterns are fractal
6) Emotions are affected by earlier emotions through emotional
feedback
◉ Technical analysis excessive feedback. Answer: prices will expand
beyond equilibrium for emotional reasons, revert to the mean, and then
expand beyond the mean in the opposite direction with investor
sentiment
◉ Primary Bull Phases. Answer: 1) Reviving confidence from primary
bear market
2) Response to increase corporate earnings
3) Speculation becomes dominant and prices rise on hopes
, ◉ Primary BEAR phases. Answer: 1) Abandonment of hopes from
which stocks were purchased
2) Selling due to decreased earnings
3) Distress selling, regardless of value
◉ The Secondary Trend. Answer: Usually lasting from 3 weeks to as
many months, during which intervals of price movement generally
retraces from 33% to 66% of primary price change since end of last
secondary reaction
◉ Line. Answer: 2-3 weeks of horizontal price movement in an average
w/in a 5% range. usually a sign of accumulation or distribution.
Breakout above or below suggest it will continue in same direction as
breakout
◉ concept of confirmation. Answer: downward movement of secondary
and perhaps primary was established when the new lows for both
averages were under the low points of the proceeding reaction.
◉ S&P 500 and Russell 2000. Answer: when the 2 indexes confirm each
other than the primary trend is confirmed
◉ Volume. Answer: Price trend and confirmation override any
consideration on volume. Important on secondary moves. Bull markets
end in periods of excessive activity and begin with light transactions
