CMT Level 1 Exams ( Updates STUDY BUNDLE
PACKAGE) The Integration of Technical Analysis |
Questions and Verified Answers| Grade A| 100%
Correct
What are the basic tenets of Dow Theory - ANSWER1.) The averages discount
everything
2.) The market has three trends
3.) Major trends have three phases
4.) The averages must confirme each other
5.) Volume must confirm trend
6.) A trend is in effect until it gives definitive signals that it has reversed
Technical Analysis by Kirkpatrick - ANSWERThe 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 - ANSWERA 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 - ANSWERNumber of stocks advancing divided by the number
of stocks declining over a particular time period.
Apex - ANSWERA peak or a point of intersection of two trendlines; the usual
connotation that some new trend may evolve as prices approach that intersection.
Arbitrage - ANSWERSimultaneous 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 - ANSWERSame as Consolidation. See also Stabilization. Trading back
and forth in a narrow range.
Bar Chart - ANSWERPrice/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 - ANSWERPeriod of accumulation (see above), also called "Bottom." Can also be
described as price level where buyers continue to buy supporting the market.
Bear Market - ANSWERA long period of time, often a year or more, when the general
trend of securities prices is down.
Bear Trap - ANSWERA false move to the downside that does not initiate a new
downtrend, but is actually the final reaction prior to a sustained advance, hence
"trapping the bears."
Block - ANSWERA single transaction of large number of shares. The NYSE defines
transactions of 10,000 shares or more as blocks.
Blow Off - ANSWERThe final phase of an uptrend, ending a mark up phase, when
prices rise very rapidly usually on high volume, leading to a sharp reaction. See
"Climax."
Breadth - ANSWERNet number of stocks advancing versus declining. When advances
exceed declines, breadth is positive; when the reverse is true, breadth is negative.
Breakdown - ANSWERLike "Breakout," but used to refer to the downside.
PACKAGE) The Integration of Technical Analysis |
Questions and Verified Answers| Grade A| 100%
Correct
What are the basic tenets of Dow Theory - ANSWER1.) The averages discount
everything
2.) The market has three trends
3.) Major trends have three phases
4.) The averages must confirme each other
5.) Volume must confirm trend
6.) A trend is in effect until it gives definitive signals that it has reversed
Technical Analysis by Kirkpatrick - ANSWERThe 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 - ANSWERA 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 - ANSWERNumber of stocks advancing divided by the number
of stocks declining over a particular time period.
Apex - ANSWERA peak or a point of intersection of two trendlines; the usual
connotation that some new trend may evolve as prices approach that intersection.
Arbitrage - ANSWERSimultaneous 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 - ANSWERSame as Consolidation. See also Stabilization. Trading back
and forth in a narrow range.
Bar Chart - ANSWERPrice/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 - ANSWERPeriod of accumulation (see above), also called "Bottom." Can also be
described as price level where buyers continue to buy supporting the market.
Bear Market - ANSWERA long period of time, often a year or more, when the general
trend of securities prices is down.
Bear Trap - ANSWERA false move to the downside that does not initiate a new
downtrend, but is actually the final reaction prior to a sustained advance, hence
"trapping the bears."
Block - ANSWERA single transaction of large number of shares. The NYSE defines
transactions of 10,000 shares or more as blocks.
Blow Off - ANSWERThe final phase of an uptrend, ending a mark up phase, when
prices rise very rapidly usually on high volume, leading to a sharp reaction. See
"Climax."
Breadth - ANSWERNet number of stocks advancing versus declining. When advances
exceed declines, breadth is positive; when the reverse is true, breadth is negative.
Breakdown - ANSWERLike "Breakout," but used to refer to the downside.
