Question 1

A period of correction is often followed by a period of ________.

Accepted Answer

A)  channel lines. 
B)  momentum. 
C)  reversals. 
D)  consolidation. 
A)  channel lines. 
B)  momentum. 
C)  reversals. 
D)  consolidation. D

Question 2

Which of the following is not one of the tests of a technical trading rule?

Accepted Answer

A)  Transaction and other costs 
B)  Consistency 
C)  Return 
D)  Risk 
A)  Transaction and other costs 
B)  Consistency 
C)  Return 
D)  Risk C

Question 3

In order to have confirmation of a major market trend under the Dow Theory, the:

Accepted Answer

A)  industrial and utility averages must confirm each other. 
B)  transportation and utility averages must confirm each. other. 
C)  utility average must lead the transportation average. 
D)  transportation and industrial average must confirm each other. 
A)  industrial and utility averages must confirm each other. 
B)  transportation and utility averages must confirm each. other. 
C)  utility average must lead the transportation average. 
D)  transportation and industrial average must confirm each other. D

Question 4

Which of the following is not a contrary trading rule?

Accepted Answer

A)  Relative strength ratio 
B)  Investment advisory opinions 
C)  Mutual fund liquidity positions 
D)  Put/call ratio 
A)  Relative strength ratio 
B)  Investment advisory opinions 
C)  Mutual fund liquidity positions 
D)  Put/call ratio

Question 5

Technical analysis focuses on timing and on the short run.

Accepted Answer

A) True 
 B)False

Question 6

Explain three specific buy signals using a moving average.

Accepted Answer

(a) The price is above the moving averag

Question 7

Institutional investors are often considered to have the "smart money," while small, individual investors are not so well informed about the market. Which two sentiment indicators treat both institutions and individuals alike?

Accepted Answer

The odd-lot theory asserts that one shou

Question 8

Which of the following is not one of the three major variables to be decided by the investor in order to construct a moving average?

Accepted Answer

A)  price. 
B)  time period. 
C)  weight to be used. 
D)  type of moving average to be constructed. 
A)  price. 
B)  time period. 
C)  weight to be used. 
D)  type of moving average to be constructed.

Question 9

The oldest approach to common stock selection is:

Accepted Answer

A)  technical analysis 
B)  fundamental analysis 
C)  stochastic analysis 
D)  value analysis 
A)  technical analysis 
B)  fundamental analysis 
C)  stochastic analysis 
D)  value analysis

Question 10

Technical analysis differs from fundamental analysis in that technical analysis:

Accepted Answer

A)  is aimed at the market while fundamental analysis is aimed at individual stocks. 
B)  is based on published market data and focuses on internal factors. 
C)  focuses on the long-term trends of production. 
D)  does not consider price and volume. 
A)  is aimed at the market while fundamental analysis is aimed at individual stocks. 
B)  is based on published market data and focuses on internal factors. 
C)  focuses on the long-term trends of production. 
D)  does not consider price and volume.

Question 11

Discuss the difference in beliefs about price adjustments toward equilibrium in technical analysis and the Efficient Market Hypothesis.

Accepted Answer

Technical analysis depends on

Question 12

A daily accumulation of stocks advancing or declining is used in:

Accepted Answer

A)  volume of trading analysis. 
B)  relative strength analysis. 
C)  breadth of market analysis. 
D)  short interest analysis. 
A)  volume of trading analysis. 
B)  relative strength analysis. 
C)  breadth of market analysis. 
D)  short interest analysis.

Question 13

The Dow theory is intended to forecast the start but not the duration of a primary movement.

Accepted Answer

A) True 
 B)False

Question 14

If a trading rule has been tried on data other than that used to produce the rule and found to be accurate, this is known as:

Accepted Answer

A)  consistency. 
B)  relative strength. 
C)  out-of-sample validity. 
D)  a filter rule. 
A)  consistency. 
B)  relative strength. 
C)  out-of-sample validity. 
D)  a filter rule.

Question 15

One of the primary tools of a technical analyst is:

Accepted Answer

A)  sell-side research. 
B)  buy-side research. 
C)  Value Line earnings estimates. 
D)  chart of stock price and volume. 
A)  sell-side research. 
B)  buy-side research. 
C)  Value Line earnings estimates. 
D)  chart of stock price and volume.

Question 16

How is relative strength calculated and used?

Accepted Answer

The relative strength of a stock is a ra

Question 17

The short interest ratio is found by dividing the number of shares sold short by the average:

Accepted Answer

A)  number of shares outstanding in the market. 
B)  daily volume of trading on the exchange. 
C)  number of stocks reaching new lows. 
D)  daily number of stocks bought long. 
A)  number of shares outstanding in the market. 
B)  daily volume of trading on the exchange. 
C)  number of stocks reaching new lows. 
D)  daily number of stocks bought long.

Question 18

Volume and specific calendar time are not considered important in a:

Accepted Answer

A)  Logarithmic price and volume chart. 
B)  Point and figure chart 
C)  Nominal price and volume chart. 
D)  Moving average convergence and divergence chart. 
A)  Logarithmic price and volume chart. 
B)  Point and figure chart 
C)  Nominal price and volume chart. 
D)  Moving average convergence and divergence chart.

Question 19

Technical analysis utilizes a top-down, fundamental approach to common stocks.

Accepted Answer

A) True 
 B)False

Question 20

Technicians that utilize the CBOE put/call ratio generally believe:

Accepted Answer

A)  option investors are almost consistent losers. 
B)  option investors are almost consistent winners. 
C)  option investors are true technicians. 
D)  option investors possess inside information. 
A)  option investors are almost consistent losers. 
B)  option investors are almost consistent winners. 
C)  option investors are true technicians. 
D)  option investors possess inside information.

Exam 16: Technical Analysis

A period of correction is often followed by a period of ________.

Which of the following is not one of the tests of a technical trading rule?

In order to have confirmation of a major market trend under the Dow Theory, the:

Which of the following is not a contrary trading rule?

Technical analysis focuses on timing and on the short run.

Explain three specific buy signals using a moving average.

Institutional investors are often considered to have the "smart money," while small, individual investors are not so well informed about the market. Which two sentiment indicators treat both institutions and individuals alike?

Which of the following is not one of the three major variables to be decided by the investor in order to construct a moving average?

The oldest approach to common stock selection is:

Technical analysis differs from fundamental analysis in that technical analysis:

Discuss the difference in beliefs about price adjustments toward equilibrium in technical analysis and the Efficient Market Hypothesis.

A daily accumulation of stocks advancing or declining is used in:

The Dow theory is intended to forecast the start but not the duration of a primary movement.

If a trading rule has been tried on data other than that used to produce the rule and found to be accurate, this is known as:

One of the primary tools of a technical analyst is:

How is relative strength calculated and used?

The short interest ratio is found by dividing the number of shares sold short by the average:

Volume and specific calendar time are not considered important in a:

Technical analysis utilizes a top-down, fundamental approach to common stocks.

Technicians that utilize the CBOE put/call ratio generally believe:

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