CMT LEVEL 1 - SAMPLE QUESTIONS AND ANSWERS.

Cycles are GENERALLY measured a. High to low b. Low to low c. High to high d. Either b or c Answer: b. Low to low Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 19. This cycle principle states as stocks go through similar cycles, the size and magnitude will differ. a. Commonality b. Variation c. Summation d. Proportionality Answer: b. Variation Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 19. Brainpower Read More Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:00 / 0:00 Full screen In regards to cycle analysis, translation is: a. Distance between troughs b. Distance between peaks c. Useful in checking where the trend direction is headed or if it is changing d. To the left when the peak is beyond the halfway point Answer: c. Useful in checking where the trend direction is headed or if it is changing Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 19. Which would be the MOST useful aspect of a cycle in studying the relationship between cycles of different lengths? a. Phase b. Period c. Amplitude d. None of the above Answer: a. Phase Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 19. A complete Elliott wave cycle is made up of how many waves? a. 5 b. 3 c. 8 d. 13 Answer: c. 8 Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 20. When analyzing long term price movements, it could be helpful to use which type of chart? a. Candle chart b. Logarithmic chart c. Bar chart d. Point and figure chart Answer: b. Logarithmic chart Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 11. In a normal 5-wave Elliott impulse wave, which wave is USUALLY expected to be the longest and most dynamic? a. 3rd b. 5th c. 1st d. 1st but sometimes 3rd Answer: a. 3rd Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 20. Which of the following would MOST likely be a continuation pattern? a. Engulfing pattern b. Head and shoulders c. Double bottom d. Flag Answer: d. Flag Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 11. Which of the following would NOT be considered a support level? a. Previous high b. Previous low c. Trading range d. All the above are considered to be support levels Answer: d. All the above are considered to be support levels Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 13. According to Robert Rhea's hypotheses: I. The primary trend is inviolate II. The averages discount everything 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 Answer: c. I, II, and III Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6. For a breakout or breakdown from a triangle to be considered valid it should occur NO MORE than _______ of the distance to the apex from the beginning of the pattern? a. One-half b. Two-thirds c. Three-quarters d. Five-sixths Answer: c. Three-quarters Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15. What is indicated when Bollinger Bands narrow? a. A stock is ready for a rally b. A stock is ready for a decline c. A stock's volatility has increased d. A stock's volatility has decreased Answer: d. A stock's volatility has decreased Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14. In the Dow Theory, the MOST important price is the a. Open b. High c. Low d. Close Answer: d. Close Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6. Which is/are considered important in determining the validity of a trendline break? a. Time b. Price c. Volume d. All of the above Answer: d. All the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 13. Which BEST characterizes continuation patterns? a. There is sideways price action b. They take a long time to form c. They usually represent long-term patterns d. They signal the start of a new trend Answer: a. There is sideways price action Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 17. Which is NOT true of a buying climax? a. Prices fall sharply at first b. Volume is very heavy c. The close is near the low end of the daily range d. Prices initially rise sharply Answer: a. Prices fall sharply at first Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15. In order for a Dow Theory sell signal to be confirmed a. The Dow Jones Industrials (DJI) and the Dow Transports (DJT) must peak 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 Answer: d. b and c Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6. The Dow Theory uses ONLY a. High prices b. Low prices c. Closing prices d. All of the above Answer: c. Closing prices Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6. A company whose stock is in a well-established uptrend reports earnings slightly above consensus estimates. 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 Answer: b. Market discounting Reference: Pring, Martin J. Technical Analysis Explained. Chapter 26. Point and figure charts are LEAST suited to a. Establishing targets b. Identifying areas of accumulation or distribution c. Identifying areas of support and resistance d. Identifying breakouts Answer: b. Identifying areas of accumulation or distribution Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 1 In a doji candlestick a. Supply exceeds demand b. Demand exceeds supply c. Supply and demand are in balance d. All the above Answer: c. Supply and demand are in balance Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 17. Which of the following IS a Fibonacci ratio? a. 50% b. 75% c. 33% d. 66% Answer: a. 50% Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 20. When using a moving average crossover system to generate buy/sell signals, a SELL signal would be generated when 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 Answer: c. The fast falls below the slow Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9. Moving averages are of LEAST use in generating buy or sell signals in a. A sideways trend b. A moderately sloping uptrend c. A steep downtrend d. Not especially useful in any of them Answer: a. A sideways trend Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9. A stock trades in a range between 51 and 55 for 10 days and then moves higher. If you have been charting the stock 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 Answer: d. There would be no count Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 4. On balance volume is USEFUL to a. Confirm price b. Spot divergence c. Clarify volume trends d. All the above Answer: d. All the above Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 4. Common filters used to confirm a trendline break INCLUDE a. Penetration above/below the trendline by a set 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 Answer: d. All the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 13. As a general rule, in rectangle, triangle, flag and pennant patterns, volume 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 Answer: b. Decreases as the pattern develops Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5. Which type of gap is LEAST likely to be filled when it occurs with high volume? a. Common b. Breakaway c. Exhaustion d. Runaway Answer: b. Breakaway Reference: Pring, Martin J. Technical Analysis Explained. Chapter 6. Which of the following percentage parameters is NOT a widely recognized percentage retracement? a. 66% b. 45% c. 50% d. 33% Answer: b. 45% Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 13. What is intermarket analysis? a. Study of the interrelationships between the various independent financial markets b. Study of the internals of the various financial markets c. Study of the various international financial markets and how they influence each other d. None of the above Answer: a. Study of the interrelationships between the various independent financial markets Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 21. The secondary trend is measured in __________, and the intermediate trend is measured in __________. a. Months or years; days or weeks b. Weeks or months; weeks or months c. Days or weeks; intraday minutes d. Intraday minutes; weeks and months Answer: b. Weeks or months; weeks or months Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6. How would you use relative strength analysis when comparing sectors? a. Compare RSIs - the higher the number, the more bullish the sector 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 Answer: c. Divide the price of one sector by an industry benchmark and compare Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 21. To INCREASE the sensitivity 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 Answer: b. Decrease the box size Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 2. In point and figure charting, the ability to obtain price objectives through use of the horizontal count is a principal advantage of the a. One box reversal chart b. Three box reversal chart c. Five box reversal chart d. All of the above Answer: a. One box reversal chart Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 4. In what charting technique will trendlines ONLY be drawn at 45 degree angles? a. Bar charts b. Candlestick charts c. Swing charts d. Simplified three box point and figure charts Answer: d. Simplified three box point and figure charts Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 3. What pattern is found in point and figure charts? a. Doji b. Head and shoulders c. Island reversal d. All of the above Answer: b. Head and shoulders Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 4. Using intraday 1x1 point and figure charts, which breakout is MOST significant? a. A breakout from a 5 column 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 Answer: c. A breakout from a 15 column congestion zone Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 1. Cycles are USUALLY measured from a. Crest to crest b. Trough to trough c. Wheel to wheel d. Curl to curl Answer: b. Trough to trough Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 19. The following is NOT common of reversal patterns a. The existence of a prior trend b. The larger the pattern the greater the subsequent move c. Tops usually take longer to form than bottoms d. The break of a major trendline Answer: c. Tops usually take longer to form than bottoms Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 6. An inverse head and shoulders pattern is a. A topping pattern b. Generally unreliable c. A reversal pattern d. a and b Answer: c. A reversal pattern Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 6. The MAXIMUM objective of reversal patterns is a. 50% retracement b. 66% retracement c. .618 of the current price d. 100% retracement Answer: d. 100% retracement Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 6. Which is TRUE of double tops a. There are two identifiable peaks at very different price 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 Answer: d. Height is often used as a measuring objective Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5. Which of the following describes an equally weighted average? a. An investor invests the same dollar amount in each security b. Is adjusted by a divisor c. Considers the market capitalization of each security in the average d. Is the way the Dow Jones Industrial Average is calculated Answer: a. An investor invests the same dollar amount in each security Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 5. A REASONABLE price objective once a stock has completed a head and shoulders pattern is a. 100% of the previous trend 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 Answer: c. Equivalent to the distance between the head and neckline Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition.Chapter 6. A continuation pattern is a. A pause in the prevailing trend b. Usually a sideways price action c. Usually a near term or intermediate term pattern d. All of the above Answer d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15 A symmetrical triangle is a. Also called a coil b. Usually a continuation pattern c. A temporary pause in the existing trend d. All of the above Answer d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15