CMT Level 1 UPDATED Exam Questions and CORRECT Answers
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Course
CMT
Institution
CMT
CMT Level 1 UPDATED Exam Questions
and CORRECT Answers
What are the basic tenets of Dow Theory - CORRECT ANSWER- 1.) 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
...
CMT Level 1 UPDATED Exam Questions
and CORRECT Answers
What are the basic tenets of Dow Theory - CORRECT ANSWER- 1.) 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 - CORRECT 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 - CORRECT 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... - CORRECT 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 - CORRECT 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? - CORRECT 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 - CORRECT 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? - CORRECT ANSWER- -Linear Least-Square regression
-Moving Averages
-Trend lines
Accumulation - CORRECT 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 - CORRECT ANSWER- Number of stocks advancing divided by the
number of stocks declining over a particular time period.
Apex - CORRECT 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 - CORRECT 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 - CORRECT ANSWER- Same as Consolidation. See also Stabilization.
Trading back and forth in a narrow range.
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