Cmt Level 1 Study Guide Questions And Correct Answers

Continuation Pattern {Ans: Continuation Pattern: Consolidation phase that temporarily interrupts an up or down move and sets the stage for another move in the same direction later on, usually of short duration.}Overbought {Ans: Price is extended too rapidly to the upside.}Blow Off {Ans: The final phase of an uptrend, ending a mark up phase, when prices rise very rapidly usually on high volume, leading to a sharp reaction. See "Climax."}Technical Analysis {Ans: The study of supply/demand relationships, investor psychology, monetary changes, and the study of price and volume movements of the market as a whole, and individual stocks in particular, in order to determine the probability of direction and degree of future price movement. Whereas fundamental analysis is concerned with the company (and its sales, earnings, products, management etc.), technical analysis is concerned only with the stock of the company (i.e., the changes in the supply/demand relationship for the stock in the market place).}What are the basic tenets of Dow Theory {Ans: 1.) The averages discount everything 2.) The market has three trends 3.) Major trends have three phases 4.) The averages must confirme each other 5.) Volume must confirm trend 6.) A trend is