Cmt Level 1 Study Guide Rated A+

Discount {Ans: The amount by which the price of an option or future falls below the theoretical value, representing the degree or pessimism of market participants.}Odd Lot Shorts {Ans: Units of less than 100 shares that are sold short. Since these are usually traded by trend-following individuals (as opposed to institutions) who join a trend very late, a high ratio of odd lot short sales to odd lot sales often signals a mark bottom. Conversely, a low ratio of odd lot shorts often signals an impending market top.}Rebuilding {Ans: See "stabilization." A period of sideways price action, usually before a trend is reversed. Sometimes called basing or accumulation after a decline, and top formation or a distribution after an advance. Also call "Rebuilding."}Penetration {Ans: See "Breakout" When stock's price or volume exceeds previously recorded high or low (or resistance or support level) or some other predetermined criteria. Also called "Penetration."}Bull Trap {Ans: A false move to the upside that does not initiate a new uptrend, but is actually the final rally before a sustained decline, hence "trapping the bulls." A bull trap can be described as a strong rally in the context of a "Bear