CMT LEVEL 1 EXAM SCRIPT 2026 QUESTIONS
WITH ANSWERS GRADED A+
◉ Technical Analysis by Kirkpatrick. Answer: The study of prices in
freely traded markets with the intent of making profitable trading or
investment decisions.
-Kirkpatrick
◉ Basic Assumptions of Technical Analysis by Edwards & Magee.
Answer: -Stock prices are determined solely by the interaction of
demand and supply
-Stock prices tend to move in trends
-Shifts in demand and supply cause reversals in trends
-Shifts in demand and supply can be detected in charts
-Chart patterns tend to repeat themselves
◉ Technical Analysts believe.... Answer: -"the market is always correct"
-that all factors (Fundamental) are already factored into the demand and
supply curves and, thus, the price of the company's stock.
◉ The Art of Technical Analysis by Pring. Answer: -is to identify trend
changes at an early stage and to maintain an investment position until
,the weight of the evidence indicates that the trend has reversed, (Pring,
2002)
◉ What is Technical Analysis used for?. Answer: -to determine the
trend, when it is changing, when it has changed, when to enter a
position, when to exit a position, and the analysis is wrong and the
position mus be closed.
-Kirkpatrick
◉ Trend. Answer: - a directional movement of prices that remains in
effect long enough to be identified and still playable
- A trend must be recognized early and be long enough for the technician
to profit.
-Kirpatrick
◉ How are trends identified?. Answer: -Linear Least-Square regression
-Moving Averages
-Trend lines
◉ Accumulation. Answer: A time when buyers emerge purchasing
securities, generally from distressed sellers. It can be seen as a period
when equities are absorbed by expanding demand over a period of time
resulting in a possible favorable effect on price or a period of price
equilibrium following a decline. This can be viewed as the first phase of
a bull trend, or perhaps even the beginning of a bull market.
, ◉ Advance-Decline Line. Answer: Number of stocks advancing divided
by the number of stocks declining over a particular time period.
◉ Apex. Answer: A peak or a point of intersection of two trendlines; the
usual connotation that some new trend may evolve as prices approach
that intersection.
◉ Arbitrage. Answer: Simultaneous buying in one market and selling in
another market in order to take advantage of differences in price. As it
relates to stock could be the purchase of the aquiree and the sale of the
acquirer. In futures could relate to buying one futures contract and
selling a like contract to capture price inefficiencies.
◉ Back and Fill. Answer: Same as Consolidation. See also Stabilization.
Trading back and forth in a narrow range.
◉ Bar Chart. Answer: Price/time chart that depicts high, low and close
data as bars on the vertical axis and time intervals on the horizontal axis.
Volume is usually indicated also, as vertical bars on the bottom of the
chart under the applicable price data.
◉ Base. Answer: Period of accumulation (see above), also called
"Bottom." Can also be described as price level where buyers continue to
buy supporting the market.
WITH ANSWERS GRADED A+
◉ Technical Analysis by Kirkpatrick. Answer: The study of prices in
freely traded markets with the intent of making profitable trading or
investment decisions.
-Kirkpatrick
◉ Basic Assumptions of Technical Analysis by Edwards & Magee.
Answer: -Stock prices are determined solely by the interaction of
demand and supply
-Stock prices tend to move in trends
-Shifts in demand and supply cause reversals in trends
-Shifts in demand and supply can be detected in charts
-Chart patterns tend to repeat themselves
◉ Technical Analysts believe.... Answer: -"the market is always correct"
-that all factors (Fundamental) are already factored into the demand and
supply curves and, thus, the price of the company's stock.
◉ The Art of Technical Analysis by Pring. Answer: -is to identify trend
changes at an early stage and to maintain an investment position until
,the weight of the evidence indicates that the trend has reversed, (Pring,
2002)
◉ What is Technical Analysis used for?. Answer: -to determine the
trend, when it is changing, when it has changed, when to enter a
position, when to exit a position, and the analysis is wrong and the
position mus be closed.
-Kirkpatrick
◉ Trend. Answer: - a directional movement of prices that remains in
effect long enough to be identified and still playable
- A trend must be recognized early and be long enough for the technician
to profit.
-Kirpatrick
◉ How are trends identified?. Answer: -Linear Least-Square regression
-Moving Averages
-Trend lines
◉ Accumulation. Answer: A time when buyers emerge purchasing
securities, generally from distressed sellers. It can be seen as a period
when equities are absorbed by expanding demand over a period of time
resulting in a possible favorable effect on price or a period of price
equilibrium following a decline. This can be viewed as the first phase of
a bull trend, or perhaps even the beginning of a bull market.
, ◉ Advance-Decline Line. Answer: Number of stocks advancing divided
by the number of stocks declining over a particular time period.
◉ Apex. Answer: A peak or a point of intersection of two trendlines; the
usual connotation that some new trend may evolve as prices approach
that intersection.
◉ Arbitrage. Answer: Simultaneous buying in one market and selling in
another market in order to take advantage of differences in price. As it
relates to stock could be the purchase of the aquiree and the sale of the
acquirer. In futures could relate to buying one futures contract and
selling a like contract to capture price inefficiencies.
◉ Back and Fill. Answer: Same as Consolidation. See also Stabilization.
Trading back and forth in a narrow range.
◉ Bar Chart. Answer: Price/time chart that depicts high, low and close
data as bars on the vertical axis and time intervals on the horizontal axis.
Volume is usually indicated also, as vertical bars on the bottom of the
chart under the applicable price data.
◉ Base. Answer: Period of accumulation (see above), also called
"Bottom." Can also be described as price level where buyers continue to
buy supporting the market.
