Question 1

Which of the following is not a sell signal?

Accepted Answer

A)   The stock price falls below the moving average line while the line is still increasing.
B)   The actual price is below the moving average, advances toward it, does not penetrate the average, and starts to turn down again.
C)   Following a rise, the moving average flattens out or declines, and the price of the stock or index penetrates it from the top.
D)   The stock price rises above the moving average line while the line is still falling.E) None of the above
F) B) and D) A

Question 2

If two well-known technical analysts seldom agree on the interpretation of a certain technical pattern, this implies:

Accepted Answer

A)   collusion between the two analysts.
B)   technical rules are too complex.
C)   technical rules are highly subjective being more of an art-form.
D)   not enough information has been gathered.E) A) and B)
F) A) and C)

Question 3

Increasing cash positions in mutual funds would be a bullish indicator.

Accepted Answer

A) True 
 B)False

Question 4

The use of technical analysis flies in the face of the notion that markets are efficient in the:

Accepted Answer

A)   weak-form of the efficient market hypothesis.
B)   semi-strong form of the efficient market hypothesis.
C)   strong form of the efficient market hypothesis.
D)   Technical analysis and the efficient market hypothesis actually complement one another.E) B) and C)
F) A) and B)

Question 5

An increase in the short interest ratio is interpreted by contrarians as being:

Accepted Answer

A)   bullish as shares need to be repurchased to close out the short sale.
B)   bearish as a large volume of buying has already taken place.
C)   neutral since the selling and buying cancel each other out.
D)   an opportunity for arbitrage in the market.E) A) and D)
F) All of the above A

Question 6

According to the odd-lot theory:

Accepted Answer

A)   large investors are more likely to buy or sell odd lots.
B)   the odd lot investors are usually wrong in their actions at market peaks and troughs.
C)   an increase in odd-lot purchases is bullish.
D)   All of the above are true for odd-lot theory.E) B) and C)
F) A) and D)

Question 7

Which form of the Efficient Market Hypothesis addresses the information used in technical analysis? Do studies of technical analysis methods tend to support or refute the EMH?

Accepted Answer

The weak form EMH addresses ma...

Question 8

The short-interest ratio is found by dividing the total shares sold short by:

Accepted Answer

A)   number of shares outstanding for the company..
B)   average daily trading volume for the company.
C)   number of stocks reaching new lows on that trading day.
D)   number of stocks reaching new highs on that trading day.E) A) and C)
F) B) and C)

Question 9

Technical analysis is based on the following statements except:

Accepted Answer

A)   Technical analysis is based on published market data focusing on internal factors such as the aggregate market, industry average or a stock.
B)   The most important factors in technical analysis are the economic and political factors external to the market itself.
C)   Technical analysis studies price movements and trading volume across time to analyze trends in stock prices as the stock price adjusts to a new equilibrium.
D)   Technicians assess the overall situation concerning stocks by analyzing breadth indicators, market sentiment and momentum.E) A) and D)
F) None of the above B

Question 10

In light of its success rate, the Dow theory is often criticized.

Accepted Answer

A) True 
 B)False

Question 11

Which one of the following is not part of technical analysis?

Accepted Answer

A)   Technical analysis is a reflection of the idea that prices move in trends.
B)   Trends are determined by the changing attitude of investors toward a variety of economic, monetary, political and psychological forces.
C)   Based on the top-down approach to fundamental analysis, technical analysis is the last stage.
D)   The art of technical analysis is to be able to identify trend changes at an early stage.E) B) and D)
F) All of the above

Question 12

Which of the following is true regarding the support level?

Accepted Answer

A)   Resistance levels tend to develop due to profit taking.
B)   It is the level at which a significant increase in demand is expected.
C)   It is a lower boundary where buyers will act to prevent any additional price declines.
D)   All of the above are true for support levels.E) A) and D)
F) C) and D)

Question 13

Some technical analysts believe that people who play the options market:

Accepted Answer

A)   are, as a group, consistent losers.
B)   are, as a group, consistent winners.
C)   are bound to earn excess profits.
D)   possess inside information.E) A) and B)
F) A) and C)

Question 14

Which of the following is not true regarding the Dow Theory?

Accepted Answer

A)   An upward price movement that fails to surpass the last peak reached is referred to as an abortive recovery.
B)   Dow Theory is based on three types of movements, primary, secondary and day-to-day.
C)   Dow Theory is intended to forecast the end of bull markets.
D)   Day-to-day ripples occur often but are of minor importance in the Dow Theory.E) A) and B)
F) A) and C)

Question 15

The Dow theory is intended to forecast both the start but duration of a primary movement.

Accepted Answer

A) True 
 B)False

Question 16

The use of technical trading rules is a very mechanical exercise without much judgment.

Accepted Answer

A) True 
 B)False

Question 17

All of the following are sentiment indicators used by technical analysts except:

Accepted Answer

A)   Short-Interest Ratio
B)   Advance-Decline Line
C)   Mutual Fund Liquidity
D)   The Odd-Lot TheoryE) A) and B)
F) None of the above

Question 18

Technical corrections:

Accepted Answer

A)   occur during secondary or intermediate in the market.
B)   supposedly adjust for previous excesses that have occurred
C)   Are of considerable importance in applying the Dow Theory.
D)   All of the above are important for the Dow Theory.E) B) and C)
F) C) and D)

Question 19

A put/call ratio that is increasing would be interpreted as a bullish signal by the contrarians.

Accepted Answer

A) True 
 B)False

Question 20

The advance-decline line:

Accepted Answer

A)   measures the number of stocks hitting both new highs and new lows.
B)   can be computed only on a daily basis.
C)   can be interpreted without reference to any market index.
D)   is often referred to as the breadth of the market.E) B) and D)
F) A) and D)

Exam 18: Technical Analysis

Which of the following is not a sell signal?

Correct AnswerverifiedA

If two well-known technical analysts seldom agree on the interpretation of a certain technical pattern, this implies:

Correct AnswerverifiedShow Answer

Increasing cash positions in mutual funds would be a bullish indicator.

Correct AnswerverifiedShow Answer

The use of technical analysis flies in the face of the notion that markets are efficient in the:

Correct AnswerverifiedShow Answer

An increase in the short interest ratio is interpreted by contrarians as being:

Correct AnswerverifiedA

According to the odd-lot theory:

Correct AnswerverifiedShow Answer

Which form of the Efficient Market Hypothesis addresses the information used in technical analysis? Do studies of technical analysis methods tend to support or refute the EMH?

Correct AnswerverifiedThe weak form EMH addresses ma...View AnswerShow Answer

The short-interest ratio is found by dividing the total shares sold short by:

Correct AnswerverifiedShow Answer

Technical analysis is based on the following statements except:

Correct AnswerverifiedB

In light of its success rate, the Dow theory is often criticized.

Correct AnswerverifiedShow Answer

Which one of the following is not part of technical analysis?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the support level?

Correct AnswerverifiedShow Answer

Some technical analysts believe that people who play the options market:

Correct AnswerverifiedShow Answer

Which of the following is not true regarding the Dow Theory?

Correct AnswerverifiedShow Answer

The Dow theory is intended to forecast both the start but duration of a primary movement.

Correct AnswerverifiedShow Answer

The use of technical trading rules is a very mechanical exercise without much judgment.

Correct AnswerverifiedShow Answer

All of the following are sentiment indicators used by technical analysts except:

Correct AnswerverifiedShow Answer

Technical corrections:

Correct AnswerverifiedShow Answer

A put/call ratio that is increasing would be interpreted as a bullish signal by the contrarians.

Correct AnswerverifiedShow Answer

The advance-decline line:

Correct AnswerverifiedShow Answer

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The weak form EMH addresses ma...
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