Exam 16: Technical Analysis

In the 1990s, many investment firms hired large numbers of fundamental analysts and very few technical analysts. Following the market downturns of 2000 and 2001, investment firms realized their mistake and hired far more technical analysts than fundamental analysts.

Explain how profit taking and support levels are related.

A filter rule specifies a breakpoint for a stock or average and trades are made when the price is greater than the filter.

Fama and Blume (1969) tested 24 filters ranging from 0.50% to 50% on each of the 30 DJIA stocks. Among the tested filters:

Conclusions about technical analysis suggest that:

What is usually shown at the bottom of a bar chart?

Investors who sell short expect to make money when the stock price goes down. How, then, can a high short-interest ratio be considered bullish?

How can relative strength analysis be helpful in a top-down approach to security analysis?

Technical analysis reflects the idea that stock prices:

If a trend exhibits support and resistance levels simultaneously that appear well defined, the trendlines are referred to as channel lines.

Which of the following is a characteristic of the short interest ratio: It is:

A bar chart is the simplest type of chart used in technical analysis.

Which of the following is true regarding the resistance level?

What are support and resistance levels?

Technical analysis is sometimes called market or ________ analysis.

The cash position of mutual funds is a contrarian indicator.

If an investor buys a stock when its price has increased 15 percent from its previous low, the investor is employing:

A high short interest ratio is generally interpreted as:

Secondary movements are often termed technical corrections.

The bearish-sentiment index is calculated as the ratio of advisory services that are bearish to the total number with an opinion.