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2. Which of the following is the MOST important aspect of a cycle in studying the
relationship between cycles of different lengths?
a. Phase
b. Period
c. Amplitude
5. In a normal 5-wave Elliot upward motive impulse wave, which wave is MOST likely the
longest and most dynamic?
a. First
b. Fifth
c. Third
8. According to the Dow Theory, secondary corrections can MOST likely be replaced by a
a. flag.
b. line.
c. wedge.
d. triangle.
9. Which of the following would be the LEAST important factor in determining the
significance of a trend line?
a. Duration
b. Angle of ascent or descent
c. Distance from current price
d. Number of times touched by prices
12. Which of the following does NOT represent a sell signal confirmation for the Dow Theory?
a. The Dow Jones Industrials and the Dow Jones Transportation indexes peak
simultaneously.
b. The Dow Jones Industrials and the Dow Jones Transportation indexes fail to confirm at
the highs.
c. Both the Dow Jones Industrials and the Dow Jones Transportation indexes break below
an important intermediate term support level.
16. Using moving averages to signal buy/sell decisions can result in a number of whipsaws in
a. up trending markets.
b. down trending markets.
c. sideways trending markets.
17. A stock trades in a range between 51 and 55 for ten days and then moves higher. If you
had been charting the stock with a three-box reversal point and figure chart, with two
points assigned per box, what would the horizontal count be?
a. 10 points
b. 30 points
c. 60 points
d. There would be no horizontal count.
18. Which of the following is usually associated with major market tops?
a. A pennant pattern
b. Ascending triangles
c. An extended third wave
d. A broadening formation
20. As a general rule, in rectangle, triangle, flag and pennant patterns, volume MOST likely
a. increases as the pattern nears completion.
b. decreases as the pattern nears completion.
c. remains fairly consistent as the pattern nears completion.
21. Which of the following types of gaps is LEAST likely to be filled when it occurs with high
volume?
a. Common
b. Runaway
c. Breakaway
d. Exhaustion
27. To increase the sensitivity of a 5x3 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.
28. In point and figure charting, the ability to obtain price objectives through the use of
horizontal count is a principal advantage of the
a. one-box reversal chart.
b. five-box reversal chart.
c. three-box reversal chart.
29. Which of the following patterns are found on point and figure charts?
a. Doji
b. Island reversal
c. Head and shoulders
30. Using intraday 1x1 point and figure charts, the MOST significant breakout is from a
a. 5 column congestion zone.
b. 10 column congestion zone.
c. 15 column congestion zone.
31. An analyst is updating one-box reversal point and figure charts ($1 box size) and the
current column contains 4 Xs. The most recent posting is $40. The stock closed yesterday
at $40.50, opened today at $40.60, went up to $40.95, and closed at the low for the day at
$39.11. How many NEW postings should the analyst make on the chart to reflect todays
trading?
a. 0
b. 1
c. 2
d. 3
33. An analyst is updating 5x3 point and figure charts. The most recent posting is $175. The
stock began trading today at $175.55, went up to $177.88, and closed at the low for the
day at $161.23. How many postings should the analyst make on the chart to reflect
todays trading?
a. 0
b. 1
c. 2
d. 7
35. Which of the following is NOT an advantage of trading futures contracts relative to trading
stocks?
a. They are leveraged.
b. They have limit days.
c. They have a favorable tax benefits.
39. Which of the following regarding moving averages is INCORRECT? Moving averages
a. follow the trend.
b. lead market action.
c. are smoothing devices.
40. The MOST commonly used price to calculate a moving average is the
a. low.
b. high.
c. close.
d. midpoint.
41. Which of the following statements regarding moving averages is INCORRECT? Longer
term moving averages
a. give fewer buy and sell signals than shorter term moving averages.
b. are better at giving signals at major tops than shorter term moving averages.
c. give back a lot more when the trend reverses than shorter term moving averages.
42. A moving average
a. is a smoothing device.
b. enables the analyst to predict precise price targets.
c. enables the analyst to predict precise time and price targets.
43. When compared to longer term moving averages, shorter term moving averages
a. produce more trades.
b. produce fewer whipsaws.
c. are less likely to falsely indicate a trend change.
47. A candlestick with identical, or nearly identical, opening and closing prices is a
a. Doji.
b. Spinning Top.
c. Morning Star.
d. Neutral Cloud.
50. Which of the following can be used in conjunction with candlestick analysis to improve
results?
a. Using cycles to confirm a candle pattern.
b. Using western techniques to confirm a candle pattern.
c. Accepting only those patterns that are confirmed by the intermediate trend.
55. The concept of Relative Strength (RS) measures the relationship between
a. two securities.
b. volume changes and price changes.
c. buying pressure and selling pressure.
d. a stocks own price movement during the past 14 periods.
62. Which of the following is NOT correct regarding speed resistance lines?
a. They divide a trend into thirds.
b. They are used to measure percentage retracements.
c. They measure the rate of ascent or descent of a trend.
d. They measure rallies and declines using only closing prices.
64. Which of the following statements regarding point and figure charts and bar charts is
CORRECT?
a. Period volume is clearly shown on a point and figure chart.
b. Time intervals are clearly shown on a point and figure chart.
c. Bar charts do not show the closing price for each time interval.
d. A new plot on a point and figure chart is made only when the price changes by a given
amount.
66. In constructing a point and figure chart, a new entry is added ONLY when the
a. price has moved to a new high or low.
b. volume confirms the price movement.
c. price has moved by equal to or more than the specified box size.
67. As the price unit of a reversal on a point and figure chart is decreased
a. the possibility of whipsaws decreases.
b. time analysis becomes more critical for interpretation.
c. the sensitivity of price movement graphically displayed is increased.
68. Which chart type is more commonly used for displaying relative strength between a stock
and the market?
a. Bar
b. Line
c. Candlestick
d. Point and Figure
69. The body of the candlestick line displays the relationship between the current sessions
a. high price and low price.
b. opening price and high price.
c. opening price and closing price.
d. closing price and the prior sessions closing price.
82. A rising relative strength (RS) line for a stock in a falling market indicates that
a. the stock is outperforming the market.
b. the stock is underperforming the market.
c. price and volume for the stock are diverging.
d. the stocks price is rising despite the falling market.
83. Which indicators would be MOST helpful in analyzing trading range markets?
a. Cycles
b. Oscillators
c. Elliott Wave
d. Moving averages
88. Which of the following bar chart patterns are least useful?
a. Wedges
b. Pennants
c. Triangles
d. Broadening formations
92. An extreme overbought reading on a momentum indicator in the early stages of a rally
a. shows that the market is ready to correct.
b. indicates that the rally is strong and will probably carry further.
c. is a clear indication that the pace of the rally is about to accelerate.
d. is a clear indication that the pace of the rally is about to slow down.
93. Which type of chart is USUALLY considered best suited for establishing price targets based
on a horizontal measurement?
a. Line charts
b. Daily bar charts
c. Candlestick charts
d. Point and figure charts
94. The theory of contrary investing is based upon the assumption that
a. individual investors are always wrong.
b. traders are often most bearish at market tops.
c. institutional investors have access to better information.
d. it is at turning points that the majority gets things wrong.
101. Which of the following is NOT correct regarding point and figure charting?
a. It has no time factor.
b. It has no volume factor.
c. It requires a continuous price flow.
d. Due to the complexity in their creation, it has only come into common usage since the
advent of computers.
102. Horace Jain, CMT, was recently convicted of embezzling funds from a local non-profit
organization where he volunteers his time. When he was first charged, an article appeared in
the local paper and identified Jain as a CMT charterholder. In the article, Jain was quoted as
saying all charges are false, and my accuser, Richard Smith, is simply out to get me. With
respect to the MTA Code of Ethics, Jains actions
a. are not in violation.
b. violate the standard against disparaging others.
c. violate the standard against misuse of the CMT designation by disclosing his status as a
CMT charterholder.
d. violate the standard with respect to maintaining the highest standards of professional
competence, integrity and judgment.
103. Jacobi Giovanni, CMT, has a private wealth management firm and is soliciting new
clients. In a meeting with a potential client, Giovanni says I promise that if you select me to
manage your money I will work as hard as I can to put together and manage an appropriate
portfolio considering your unique circumstances, goals and objectives. With respect to the
MTA Code of Ethics, Giovannis actions
a. are not in violation.
b. are in violation as the statement is inaccurate and misleading.
c. are in violation as Members and Affiliates cannot make any promises when soliciting
clients.
d. are in violation as the Code prohibits taking into account an individuals unique
circumstances.
104. Noel Martinelli, a CMT Level 1 candidate, recommended the purchase of the stock of the
New Brewing Company. His analysis stated that The last five times the Paraco National
Soccer team has been victorious in an international match, New Brewing Company stock has
risen significantly in price. Because Paraco defeated Uraco last weekend in an international
match, I am recommending the stock. With respect to the MTA Code of Ethics, Martenellis
actions are
a. not in violation.
b. in violation as the statement is inaccurate.
c. not in violation, as he is only a Level 1 candidate and is not bound by the Code.
d. in violation as the analysis is not considered reasonable in field of technical analysis.
105. Alex Chacko, a CMT Level I candidate, was being interviewed on a local radio show.
Chacko was very bullish about the equity market based on applying the basic principles of the
Dow Theory. A prominent fundamental analyst who was also on the radio show stated that
based on his analysis, the outlook for the equity market was bearish. Chacko responded to
the remarks of the fundamental analyst by stating that The fundamentals simply dont
matter. Anyone who looks at fundamentals over technical signals deserves the losses they
will receive. With respect to the MTA Code of Ethics, Chackos actions are
a. not in violation, as he is only a Level 1 candidate and is not bound by the Code.
b. not in violation of the Code because the statements were not in published form.
c. in violation of the Code in terms of disparaging the work of the fundamental analyst.
d. in violation of the Code in terms of not keeping current with developments in major
analytical fields.
106. Ishmael Tariq, CMT, is out to lunch at a restaurant close to the headquarters of the
Simon Engineering Company. He overhears the management of Simon talking about the
negative article on Simon that appeared in the local newspaper that morning. Tariq reads the
article at lunch and calls his assistant and instructs her to sell the Simon stock holdings from
the mutual fund he manages. Two weeks later, the stock price of Simon was down 50% from
the time Tariq sold the holdings.
With respect to the MTA Code of Ethics, Browns actions
a. are not in violation of the Code.
b. violate the Code with respect to acting on the basis of inside information.
c. are not in violation of the Code because Browns actions benefited his clients.
d. violate the Code because he did not have a reasonable basis for the investment
decision.
109. Harold Johnson, CEO, sells 10,000 shares of his company stock. Mr. Johnson is which
type of market participant?
a. Liquidity
b. Informed
c. Uninformed
115. Methods to measure relative strength include all of the following EXCEPT the
a. beta method.
b. alpha method.
c. trend slope method.
d. percentage change method.
116. Which of the following is NOT included in the CANSLIM stock screening method?
a. Leader or laggard
b. Annual sales increases
c. Institutional sponsorship
d. Annual earnings increases
117. One of historys first known technical analysts, Sokyo Honma, developed trading rules
known as the
a. Sakata constitution.
b. Saku-Gawa No Kon.
c. Rokushaku bo kabudo.
d. Shimuzu charting approach.
119. The original intent of Charles Dow was to use the interplay of his Industrial and Railroad
averages as
a. market indicators.
b. economic indicators.
c. timing signals for intermediate term trading.
120. The expression The market is not a weighing machine, rather it is a voting machine
refers to the
a. correctness of the Efficient Market Hypothesis.
b. value of each issue being recorded by an exact and impersonal mechanism.
c. countless individuals who register their choices which are the product of and partly of
emotion.
121. Which of the following is not included in Robert Rheas Dow Theory hypotheses?
a. The Dow Theory is infallible.
b. The primary trend is inviolate.
c. The averages discount everything.
122. Dow Theory teaches that the investor should forego attempting to predict the secondary
trends because
a. they are too random.
b. they are subject to manipulation.
c. exogenous events can be too great of an influence.
d. their reversals are too similar to primary reversals and can create confusion.
123. The Dow tenet that says Volume goes with the trend is mainly focused on
a. all the trends.
b. only the primary trend.
c. only the secondary trend.
d. both the primary and secondary trend.
124. Which of the following is NOT a tool of Federal Reserve monetary policy?
a. Changing the discount rate
b. Changing the federal funds rate
c. Changing the amount of reserves banks are required to hold
d. Buying and selling U.S. Government and Agency issues in open market operations
131. Three Steps and a Stumble is a market indicator based upon three consecutive
a. monthly increases in insider trading activity.
b. monthly increases in the bank prime interest rate.
c. highs in the Dow Jones Industrial Average reached on decreasing volume.
d. increases in either the federal funds target rate, margin requirements or reserve
requirements.
134. Bar charts typically contain all of the following prices EXCEPT the
a. low.
b. high.
c. closing.
d. opening.
135. Which of the following prices is common to both line and bar charts?
a. Low
b. High
c. Open
d. Close
CMT Level 1 Sample Questions Answer Sheet
1. a. low to low
Reading Reference: Pring, 2002, p. 391
2. a. Phase
Reading Reference: Kirkpatrick and Dahlquist, 2011 p. 454-5.
4. c. 8
Reading Reference: Kirkpatrick and Dahlquist, 2011, p. 478-80.
5. c. Third
Reading Reference: Kirkpatrick and Dahlquist, 2011, p. 481.
6. c. Logarithmic
Reading Reference: Kirkpatrick and Dahlquist, 2011, p. 220.
7. c. Broadening formation
Reading Reference: Edwards and Magee, 2007, p 151.
8. b. line.
Reading Reference: Edwards and Magee, 2007, p. 21.
12. a. the Dow Jones Industrials and the Dow Jones Transportation indexes must peak
simultaneously
Reading Reference: Kirkpatrick and Dahlquist, 2011, pp. 82-3.
15. b. 50%
Reading Reference: Pring, 2002, pp. 298-300.
21. c. breakaway
Reading Reference: Kirkpatrick and Dahlquist, 2011, p. 363-70.
23. c. Provides a method for evaluating the performance of a security relative to another
security or index.
Reading Reference: Kirkpatrick and Dahlquist, 2007, pp.433-4.
24. c. Any trend is influenced by its next longer and next shorter trend
Reading Reference: Kirkpatrick and Dahlquist, 2011, pp. 15-6.
25. c. lines tracking higher highs and lower lows to determine trend.
Reading Reference: Kirkpatrick and Dahlquist, 2011, pp. 288-91.
26. d. The longer the trend, the more difficult it is to identify its reversal.
Reading Reference: Pring, 2002, p,17.
31. a. 0
Reading Reference: Kirkpatrick and Dahlquist, 2011, pp. 341-2.
32. b. They are preferred over arithmetic scaling for long-term trend analysis
Reading Reference: Pring, 2004, pp. 68-71; 142-5.
33. a. 0
Reading Reference: du Plessis, 2005, pp 77-80.
40. c. close
Reading Reference: Kirkpatrick and Dahlquist, 2011, p. 276.
41. b. are better at giving signals at major tops than shorter term moving averages.
Reading Reference: Kirkpatrick and Dahlquist, 2011, pp. 279-81.
42. a. is a smoothing device.
Reading Reference: Kirkpatrick and Dahlquist, 2011, p. 276.
46. b. number of futures contracts outstanding at any one time in each delivery month.
Reading Reference: Kirkpatrick and Dahlquist, 2011, pp. 427-8.
47. a. Doji
Reading Reference: Kirkpatrick and Dahlquist, 2011, pp. 391-2.
51. c. The proper order to follow in chart analysis is to begin with the long range and
gradually work to the near term in order to gain perspective.
Reading Reference: Edwards and Magee,2007, p. 323.
56. c. level where selling pressure is sufficiently strong to overcome buying pressure.
Reading Reference: Kirkpatrick and Dahlquist, 2011, p. 230.
57. a. market breadth.
Reading Reference: Pring, 2002, p.436.
58. b. 54 years.
Reading Reference: Pring, 2002, p. 369.
62. d. They measure rallies and declines using only closing prices
Reading Reference: Pring, 2002, pp. 294-7.
64. d. A new plot on a point and figure chart is made only when the price changes by a given
amount
Reading Reference: Pring. 2002, p. 277.
66. c. price has moved by equal to or more than the specified box size.
Reading Reference: du Plessis, 2005, p 53.
68. b. Line
Reading Reference: Pring, 2002, p. 305.
72. d. the more times a trend line has been successfully tested, the greater the significance
of its violation.
Reading Reference: Pring, 2002, p.145..
77. c. shorter length moving average crosses a longer length moving average from above.
Reading Reference: Kirkpatrick and Dahlquist, 2011, pp. 280-1.
83. b. Oscillators
Reading Reference: Pring, 2002, pp. 544-6.
85. d. The security is performing better than the market or the entity being compared
Reading Reference: Pring, 2002, p. 306.
86. b. Investors act rationally
Reading Reference: Kirkpatrick & Dahlquist, 2011, p 9 & 17.
91. a. Flag
Reading Reference: Kirkpatrick & Dahlquist 2011, p. 320.
92. b. Indicates that the rally is strong and will probably carry further
Reading Reference: Pring, 2002, p.190.
99. c. It is a bar chart when the bars vary in width determined by volume
Reading Reference: Kirkpatrick & Dahlquist 2011, pp. 412-4.
102. d. violate the standard with respect to maintaining the highest standards of
professional competence, integrity and judgment.
104. d. are in violation as the analysis is not considered reasonable in field of technical
analysis.
105. c. are in violation of the Code in terms of disparaging the work of the fundamental
analyst.
109. b. Informed
Reading Reference: Kirkpatrick and Dahlquist (2011), pp. 78-9.
120. c. countless individuals who register their choices which are the product of and partly
of emotion
Reading Reference: Kirkpatrick and Dahlquist (2011), p. 28.
122. d. their reversals are too similar to primary reversals and can create confusion
Reading Reference: Kirkpatrick and Dahlquist (2011), p. 81.
127. c. A high-priced stock has more influence on the average than a lower-priced stock.
Reading Reference: Kirkpatrick and Dahlquist (2011), pp. 69-72.
133. a. Margin debt is money borrowed from the Federal Reserve using securities as
collateral
Reading Reference: Pring (2002), pp. 501-4.
134. d. opening
Reading Reference: Kirkpatrick and Dahlquist (2011), pp. 201-1.
135. d. close
Reading Reference: Kirkpatrick and Dahlquist (2011), pp. 207-11.