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CMT Level 1 Sample Quiz Questions (Set 2)
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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 patternd. All of the above
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Answer c. 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
The apex of a triangular pattern is
a. The point where two lines meet
b. A point that helps to time and measure the potency of the pattern
c. An important support or resistance level after the breakout occurs
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
Volume should diminish during the price swings within a triangular pattern
a. True
b. Falsec. Sometimes
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d. Only on the downside swings
Answer a. True
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 15
The breakout from a triangle formation
a. Should take place with a sharp increase in volume
b. Should take place between 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
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
The descending triangle is just a mirror image of the ascending triangle and is generally considered a ______ pattern
a. Bullish
b. Bearish
c. Continuation
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 15
All of the following are true of flag and pennant patterns EXCEPT
a. They are short term patterns completed in one to two weeks
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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
Answer d. They are reversal patterns
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 5
The measuring technique for MOST continuation patterns implies that a price objective from the breakout point is equal to the ____ of
the pattern at its broadest point
a. Width
b. Height
c. None of the above
d. 100% of prior trend
Answer b. Height
Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
The reversal pattern that can also appear as a continuation pattern is
a. Saucer
b. Head and shoulders
c. Spike
d. Double top
Answer b. Head and shoulders
Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition. Chapter 6
Stock traders rely heavily on
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a. 4 and 92 day moving averages
b. 50 and 200 day moving averages
c. 30 and 40 week moving averages
d. b and c
Answer d. b and c
Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9. Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: TheComplete Resource for Financial Market Technicians. Chapter 14
The simple moving ave rage
a. Gives equal weight to each periods price
b. Gives greater weight to the more recent price
c. Assigns greater weight to more recent data and includes all of the data in the life of the instrument
d. None of the above
Answer a. Gives equal weight to each periods price
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 14
A Channel breakout sys tem works extremely well in
a. Trending markets
b. Non-trending markets
c. Daily and weekly charts and monthly charts
d. a and c
Answer: d. a and c
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 12
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The moving average
a. Follows the trend
b. Is a smoothing device
c. Lags market action
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 14
The crossover method refers to
a. Buying the same security high and selling it low twice in the same day
b. Taking the buy/sell recommendations of a fundamental analystc. A buy or sell signal generated when a shorter moving average
crosses a longer moving average
d. a and b
Answer c. A buy or sell signal generated when a shorter moving average
crosses a longer moving average
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 14
The most commonly used price to calculate the moving average is the
a. High
b. Low
c. Midpoint
d. Close
Answer d. Close
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Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 14
In a 10-day simple moving average, each days price is assigned a weighting of
a. 1%
b. 5%c. 10%
d. 20%
Answer c. 10%
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 14
Which moving average(s) assign GREATER weight to the most recent data?
a. Simple
b. Weighted
c. Exponential
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 14
Longer-term moving averages
a. Give fewer buy and sell signals
b. Are better at giving signals at major tops
c. Give back a lot more when the trend reverses
d. a and c
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Answer d. a and c
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 14
Shorter moving averages
a. Produce more trades
b. Produce fewer whipsaws
c. a and b
d. None of the above
Answer a. Produce more trades
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 14
To help confirm a price trend, volume should expand
a. On a reversal day
b. On a strong close
c. In the direction of the trend
d. When a price target is met
Answer c. In the direction of the trend
Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
Volume divergence occurs when
a. Volume expands while open interest contracts
b. Volume expands while the daily trading range contracts
c. A new high in an uptrend takes place on declining volumed. Volume declines during a sideways congestion pattern
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Answer c. A new high in an uptrend takes place on declining volume
Reference: Pring, Martin J. Technical Analysis Explained. Chapter 23
On a head and shoulders top, the head is typically made on
a. Active volumeb. Light volume
c. Breakout volume
d. Normal volume
Answer b. Light volume
Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition. Chapter 6
Volume in a head and shoulders pattern is HIGHEST where?
a. At the top of the head
b. At the completion of the head
c. During the right shoulder
d. During the left shoulder
Answer c. During the left shoulder
Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition. Chapter 6
Triangle price patterns should be accompanied by
a. Active volume within the pattern
b. Heavier volume in the direction of the eventual breakout
c. A gradual drop-off in volume until the breakout
d. No discernible difference in volume until after the breakout occurs
Answer c. A gradual drop-off in volume until the breakout
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Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 15
Technicians believe that
a. Price precedes volume
b. Volume precedes pricec. Volume and price are typically coincident indicators
d. Volume matters most during breakouts
Answer b. Volume precedes price
Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
A se lling climax
a. Typically occurs at a market top
b. Typically occurs at a market bottom
c. Is accompanied by average to low volume
d. Indicates new shorts getting trapped at the bottom
Answer b. Typically occurs at a market bottom
Reference: Pring, Martin J. Technical Analysis Explained. Chapter 22
Open interest is
a. The number of contracts traded in a day
b. The number of outstanding contracts in any given day
c. The sum of total volume and open interest
d. None of the above
Answer: b. The number of outstanding contracts in any given day
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Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 18
The primary use of candlestick patterns is to
a. Define the intermediate and short-term trends, but not the primary trend
b. Define the primary, intermediate, and short-term trendsc. 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
Answer c. Strengthen the possibility of a reversal or continuation of a price trend
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 17
Which is an example of candle pattern filtering?
a. Accepting only those patterns that fit the strict definition of their pattern
b. Accepting only those 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
Answer c. Using western techniques to confirm a candle pattern
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 11
Which tools could you use in candle pattern filtering?
a. Cycles
b. Point and Figure chart
c. RSI and MACD
d. Dow Theory
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Answer c. RSI and MACD
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 17
The analysis of cycles provides
a. An objective determination 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
Answer b. An indication of time duration of a trend
Reference: Pring, Martin J. Technical Analysis Explained. Chapter 21
For a futures contract, daily volume represents
a. The dollar volume of the contracts traded
b. The cumulative price change for the day
c. The number of contracts traded during the day
d. The open interest at the end of the day
Answer c. The number of contracts traded during the day
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 18
Flow of fund analysis relies in part
a. On the sentiment of investment advisory services
b. On monthly price movements of the Dow Jones Industrial Average
c. On market volume statisticsd. On measuring the cash position of different investor groups
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Answer: d. On measuring the cash position of different investor groups
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 10
A momentum index measures
a. Investor sentiment
b. Investor psychology
c. The rate of change of prices
d. Absolute volume level
Answer c. The rate of change of prices
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 18
A simple moving average
a. Is a cumulative breadth measure
b. Is constructed from various randomly selected interviews of retail investors
c. Seldom changes in value
d. Is constructed by totaling a set of data and dividing that total by the number of observations
Answer: d. Is constructed by totaling a set of data and dividing that total by the number of observations
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 14
The objective of the Dow Theory is to determine
a. Changes in market psychology
b. The likelihood of volume reversalsc. The primary direction of the stock market
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d. Timing of market bottoms
Answer c. The primary direction of the stock market
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 6
Oscillators are normally used to
a. Identify overbought or oversold market conditions
b. Identify price/volume divergences
c. Identify Elliott Wave cycles
d. Gauge differentials between buyers and sellers
Answer: a. Identify overbought or oversold market conditions
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapters 8 and 18
Relative strength analysis, as applied in equity analysis relates
a. Volume changes to price changes
b. Unsophisticated investor behavior to price cycles
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
Answer c. Changes in security prices in relation to other security prices, group price indices or market action
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 18
The resistance level of a price trend refers to
a. The level under the market where buying interest is
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sufficiently strong to overcome selling pressure
b. The level over the market where selling pressure is
sufficiently strong to 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
Answer b. The level over the market where selling pressure is
sufficiently strong to overcome buying pressure and a price
advance is expected to be turned back
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 12
To measure an overbought or oversold market level, a technical analyst would normally
a. Look for moving average crossoversb. Look for a series of exhaustion gaps
c. Use one or more price oscillators
d. Look for price and volume divergences
Answer d. Look for price and volume divergences
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 18
Accumulation normally occurs
a. Near a market bottom
b. Near a market top
c. In declining markets
d. After a completed trading range
Answer a. Near a market bottom
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Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
The Kondratieff cycle extends for a period of about
a. 13 weeks
b. 13 years
c. 54 weeksd. 54 years
Answer d. 54 years
Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians.
Chapter 19
The Public/Specialist Short Sales Ratio is used as a tool that
a. Shows the difference 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
Answer: a. Shows the difference between sophisticated money and unsophisticated money
Reference: Pring, Martin J. Technical Analysis Explained. Chapter 26
Blow-offs are identified
a. Near market bottoms
b. By observing a sharp rally in prices after a long advance accompanied by a sharp increase in trading activity
c. By observing a sudden sharp drop in prices after a long decline accompanied by heavy trading activity
d. Using techniques of cycle analysis
Answer b. By observing a sharp rally in prices after a long advance accompanied by a sharp increase in trading activity
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Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition.Chapter 10.1
A selling climax is identified
a. By observing converging cycle patterns
b. By observing divergence between market breadth and
volumec. By observing sharply rising prices
d. None of the above
Answer d. None of the above
Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition.Chapter 10.
A breakaway gap usually
a. Occurs during the accumulation phase of a market cycle
b. Signals the beginning of an important price move
c. Provides a major divergence signal
d. Occurs at the end of an important price move
Answer: b. Signals the beginning of an important price move
Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition.Chapter 12
Price cycles are normally measured by
a. Their amplitude
b. Their period
c. Their phase
d. All of the above
Answer d. All of the above
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Reference: Pring, Martin J. Technical Analysis Explained. Chapter 21
Comments
Vinayak Parmar
8/14/11 @ 02:14 am
5/5 Stars.
price cycle are measured by pahse period and amplitude
Yan Zhang
9/29/11 @ 08:40 am
Open interest is
a. The number of contracts traded in a dayb. The number of outstanding contracts in any given day
c. The sum of total volume and open interest
d. None of the above
Answer: a. The number of contracts traded in a day
=> should the correct answer be b)?
TARUN SURANA10/3/11 @ 10:08 am
@ yan yes answer us b
TARUN SURANA
10/3/11 @ 10:08 am
@ yan yes answer is b
TARUN SURANA
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10/3/11 @ 03:32 pm
@ yan yes answer is b
Shiv Prakash
10/9/11 @ 04:30 am
We see such mistakes on the sample papers which should be rectified fast as it creates confusions among the beginners.
Adrian Filip
10/11/11 @ 07:03 am
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 patternd. All of the above
Answer c. All of the above
The text of the answer is correct but the letter is wrong. it should have been d. instead of c.
Adrian Filip
10/11/11 @ 07:06 am
Volume in a head and shoulders pattern is HIGHEST where?
a. At the top of the head
b. At the completion of the head
c. During the right shoulder
d. During the left shoulder
Answer c. During the left shoulder
The text of the answer is correct; the letter is not. It should have been d.
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Cristian Varga
10/18/11 @ 04:14 am
The limited life feature of the contracts poses some problems for futures traders which stock traders
do not face. This is due to:
a. The very high volatility related to the futures markets, which results in a lot of whipsaws
b. The average futures contract has a trading life of about a year and a half only
c. Futures markets are normally more risky than equity marketsd. a and b
Cristian Varga
10/18/11 @ 04:19 am
can anyone help on the question above?
if i remeber correctly the correct answer in the MTA booklet is B. can anyone explain this question to me.I know the life of a futures contract is 4
months or 1 month.That s why there are 4 rollovers every year on some exchanges and 12 on other excahnges.
Mahendra Singh
10/20/11 @ 01:01 am
It his correct?
To measure an overbought or oversold market level, a technical analyst would normally
a. Look for moving average crossovers
b. Look for a series of exhaustion gapsc. Use one or more price oscillators
d. Look for price and volume divergences
Answer d. Look for price and volume divergences
ANKIT NARSHANA
10/20/11 @ 02:56 am
I guess answer should be C) use one or more price ocillators
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Erik Tatje
10/20/11 @ 04:21 pm
Ya, that question appears in Level 1 Booklet A as well (#137) and the booklet says the correct answer is C, which makes the most sense.
Mahendra Singh
10/21/11 @ 12:10 am
Thanks, that's what i thought. They should try correcting some of these errors on this entry.
Ayman Khalaf
10/21/11 @ 09:05 pm
for mahendra d is correct as he says the market not astock and the question is based on the idea that say when prices make arecord price (low or
high) on low volume its accumulation or distribution
Michael Schmidt
10/22/11 @ 12:18 am
These questions that are printed incorrectly really need to be fixed. The purpose of having this resource is to help with the testing process and this
really brings in a level of doubt. The comments section however is a very good way of capturing such errors.
Mahendra Singh
10/22/11 @ 03:26 am
@Ayman Khalaf: so in this case the Level 1 Booklet A is incorrect? I am of the opinion the answer should be C.
Oscillators can be used to gauge OB/OS conditions against markets/indices as well.
Divergence i think generally serves as warning that either the bulls or bears (the trend) are weakening and i don't think has great relevance really to a
market being overbought or oversold...yes divergence can and is often observed in overbought or oversold markets, but they can also be seen in
sideways markets as well.
Mahendra Singh
10/22/11 @ 03:39 am
i think if the question was phrased "to gauge the likelihood of a reversal in an overbought or oversold market, a technical analyst would normally...",
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then "d. Look for price and volume divergences" would be more correct.
Daniel Kuczero
10/22/11 @ 10:46 am
I have also found errors in the sample tests... Someone should get these corrected immediately. I took the sample exams and answered correctly, but
the answer code had the correct answer but mislabeled with the wrong letter! This will undoubtedly add confusion to newcomers.
Daniel Kuczero
10/22/11 @ 10:47 am
....and regarding the futures contracts having an average life of 1.5 years-I don't get that either. I have traded futures and clearly there are several
contracts throughout the year (depending on the market traded) and I don't understand the logic in that answer....
Christian Peterson
2/28/12 @ 04:37 pm
Shorter moving averages
a. Produce more trades
b. Produce fewer whipsaws
c. a and b
d. None of the above
Answer a. Produce more trades
Shorter moving averages do not produce more trades. They produce more trading signals.
Harshad Mane
4/30/12 @ 01:26 pm
Open interest is the number of outstanding contracts
Add your comments:
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