CMT Level 1 Practice Questions and Quiz

UPDATE 2016: please see our updated mock quiz with new iPad, iOS, and Android technology HERE !


In order to make our Level 1 mini quiz more accessible as well as searchable, I am posting the text version of the quiz below. This is the same exact quiz available on our Study Material page only in this case you don’t have to download the file – making it easier to access and refer to.


1. Which of the items below affect market prices?


I. Fear, greed, arrogance

II. Earnings estimates and earnings reports

III. Economic cycles, investor mood, and market tone

IV. Interest rates


a.) II only

b.) II and IV

c.) I, III, and IV

d.) All of the above


2. Which statement best reflects the significance of stock prices and round numbers:


a.) A stock will always advance higher than the closest round number in a bull market.
b.) A stock will always decline lower than the closest round number in a bear market
c.) If advancing, a stock will likely meet resistance at a round number, especially if it is also an all-time
d.) If advancing, a stock will likely gap over round numbers, missing them entirely


3. Based on historic averages, at what time (EST) during the day would one expect to find the largest upward bias in prices?


a.) Between 11:30am and 12:30pm
b.) Between 3:15pm and 3:45pm
c.) The first 15 minutes the market is open
d.) The last 15 minutes the market is open


4. After a lengthy advance, a broadening formation followed by a symmetrical triangle would likely be forming:


a.) A diamond top
b.) A head-and-shoulders top
c.) A rounding top
d.) A one-day reversal


5. Of the following, which one is NOT typically a major reversal pattern?


a.) Head-and-Shoulders
b.) Rounding turns
c.) Pennants
d.) Symmetrical triangles


6. The indicator that measures relative volume in advancing stocks vs. declining stocks is:


a.) The Arms Index
b.) The Advance/Decline Line
c.) The Chaiken Oscillator
d.) The RSI


7. According to the chart below, candle A. opened at ____, and closed at ____.



a.) $14, $13
b.) $13, $14
c.) $14, $12
d.) $12, $13


8. The high low logic index is the lesser of which two ratios?


I. The number of weekly new highs to total issues
II. The number of weekly new lows to total issues
III. The quantity of weekly advancing volume to total issues
IV. The quantity of weekly declining volume to total issues


a.) I and III
b.) I and II
c.) III and IV
d.) I and IV


9. This moving average takes into account the average for price and time, and is used to identify the cyclical nature of trends:


a.) envelopes
b.) an exponential moving average
c.) a simple moving average
d.) a centered moving average


10. A pullback is:


a.) A rally after a downside breakout
b.) A sustained market decline
c.) A reaction after an upside breakout
d.) A type of oscillator


11. One would use ratio analysis to:


a.) Determine whether a stock is above or below its moving average
b.) Determine if the markets are likely to experience a significant decline in the near future
c.) Analyze the effectiveness of support and resistance for a particular stock
d.) Compare different markets to see which is performing most favorably


12. The chart pattern outlined below represents:



a.) A symmetrical triangle
b.) An ascending triangle
c.) A descending triangle
d.) A wedge formation


13. Choose the answer that best describes the order a technician practicing top-down analysis would study the market:


a.) The general market, individual companies, then sectors
b.) The general market, sectors, then individual companies
c.) Sectors, the general market, then individual companies
d.) Stocks, sectors, then the general market


14. The normal and expected property of any reaction going against a prevailing primary trend as defined by Edwards and Magee is:


a.) Increasing fervor
b.) Diminishing vigor
c.) Volatility
d.) Stability


15. One would expect to commonly find these formations in a bear market:


a.) Broadening formations
b.) Falling Wedges
c.) Rising Wedges
d.) Rounding tops


16. A “blue line” as defined by Edwards and Magee is:


a.) A trend line connecting the price peaks of a security
b.) A trend line connecting the price troughs of a security
c.) A trend line connecting the troughs of a security whose price is flat
d.) The line that results from plotting a tangent equal to the highest price slope


17. “The net amount of any group of market players’ optimism or pessimism reflected in any asset or market price at a particular time” would best be defined as:


a.) Net ticks
b.) Net News Impact
c.) Overhead resistance
d.) Sentiment


18. The 3-bar pattern outlined below can best be described as:



a.) A point
b.) A three-bar squeeze
c.) A horn pattern
d.) A shark pattern


19. One of the largest problems for technical analysts is representation. Representation can best be defined as:


a.) The recognition of patterns where they do not exist
b.) The event that occurs when a pattern becomes too identifiable among analysts, negating its
c.) The process of using a short-term pattern to draw inferences for long-term prices
d.) The theory that states that one pattern must always carry the same implications


20. The fractal nature of trends refers to:


a.) The ability of trends to fracture and become inconsequential
b.) The nature of trends to have their implications known before the trend is finished developing
c.) The nature of trends to have the same characteristics regardless of the time the trend spans
d.) The nature of trends to have the same meaning if identified in two different securities


21. A ninety-percent downside day, or NPDD, occurs when:


a.) Ninety-percent of all stocks are down for the day
b.) Ninety-percent of all volume is to the downside for the day
c.) Downside volume exceeds the cumulative total of upside and downside volume by 90% AND the
percentage of downside points exceeds the cumulative total of all points gained or lost by 90%
d.) The major averages are down by at least 90% for the day


22. The following trend lines annotated on the chart below are collectively known as:



a.) A spear
b.) Poseidon’s Trident
c.) Wilder’s Wrench
d.) Andrew’s Pitchfork


23. One of the most widely accepted stock cycles, this cycle has a tendency to repeat itself roughly once every 41-months and did so with remarkable consistency during the period from 1796 to 1923:


a.) The Popular Cycle
b.) The Kondratieff Cycle
c.) The Presidential Cycle
d.) The Long Wave Cycle


24. The process of continuously raising a stop order to adjust for volatility and new highs using ATR is known as:


a.) A time stop
b.) A Chandelier exit
c.) A Hanging Man
d.) Parabolic SAR


25. The “Drop-off Effect” is the result of:


a.) The deletion of the earliest data from a moving average
b.) A precipitous price decline
c.) The inclusion of more price data in an extended moving average
d.) Daily or weekly price data that is excluded from a chart with every new daily or weekly price data


The answers can be found in the follow-up post here.

See our mock exams, which can be taken from iOS, Android, or iPad here.


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