Technical Analysis (Final Exam)

Answer the following questions with the best response.

1. You should use technical analysis or fundamental analysis but not both?

a. True
b. False

2. What should traders, investors be looking for when looking at a price chart?

a. Direction
b. Momentum
c. Exit and entry points
d. Pattern recognition
e. All of the above

3. Long-term charts and trends are important because they:

a. Dominate other time frames
b. Can help identify strong long-term support and resistance
c. Can help identify type of stock, e.g. slow growth, high growth, cyclical
d. Help determine phase of cycle trend is in.
e. All of the above

4. Technicians use all of the following except:

a. Balance Sheets
b. Income statements
c. Financial ratios
d. Economic indicators
e. All of the above

5. Fundamental analysis uses all of the following except:

a. Volume
b. Oscillators
c. Sentiment indicators
d. Pattern recognition
e. All of the above

6. Which statement best fits the definition of technical analysis:

a. Using financial statement and economic analysis to determine if a stock is undervalued, fairly valued or over valued.
b. Buying and sell high
c. Buying on strength and selling on weakness
d. Using charts, volume and indicators to forecast prices
e. None of the above

7. Using what you know about TA, what might you do if you saw the chart below?

a. Buy on a pullback
b. Sell immediately or sell on a rally
c. Trade support and resistant levels
d. Determine if stock undervalued or overvalued
e. None of the above

8. Using what you know about TA, what would you do if you saw the chart below?

a. Buy on a pullback
b. Sell immediately or sell on a rally
c. Trade support and resistant levels
d. Determine if stock undervalued or overvalued
e. None of the above

9. Using what you know about TA , what would you do if you saw the chart below?

a. Buy on a pull back
b. Sell immediately or sell on a rally
c. Buy and sell support and resistant levels
d. Determine if stock undervalued or overvalued
e. None of the above

10. Approximately how many buy signals were triggered using the trendlines in the chart below?

a. 7
b. 2
c. 12
d. 1
e. 0

11. Which concept is used to analyze the chart above?

a. Momentum
b. Moving Averages
c. Dow Theory
d. Trending
e. None of the above

12. Approximately how many strong sell signals were generated using the 20 day moving average in the chart below?

a. 5
b. 7
c. 2
d. 1
e. 0

13. How many buy signals were generated using the 50-day moving average in the chart below?

a. 0
b. 1
c. 2
d. 3
e. 5

14. How many buy signals were generated using the 200-day moving average in the chart below?

a. 0
b. 1
c. 2
d. 3
e. 5

15. Technical analysis is a:

a. Discipline of accuracy
b. Discipline that can be wrong
c. Discipline based on forecasting the true value of a business
d. A very new discipline
e. None of the above.

Refer to the following chart to answer questions 16-19

16. What type of top is formed in the chart above?

a. Spike
b. Head and shoulders
c. Rounding, umbrella
d. Rectangle
e. None of the above

17. Approximately how long did the bull market last in the chart above?

a. 2 years
b. 4 years
c. 6 years
d. over 10 years
e. None of the above

18. Where is the long-term resistance and where you would probably short the market?

a. Round numbers
b. 7500 area
c. 10,000 area
d. 11,000 area
e. None of the above

19. Where is long-term support?

a. 7500 area
b. 10,000 area
c. 3000 area
d. Round numbers
e. All of the above

Refer to the following QQQ chart to answer questions 20-24

20. What type of top is formed in the QQQ chart above?

a. Spike
b. Head and shoulders
c. Rounding, umbrella
d. Double Top
e. None of the above

21. What was (were) the danger signal(s) the QQQ chart was giving?

a. Acceleration from the trend line
b Prices more than doubled in one year
c. Nearly 90-degree trend line ascent
d. Ease of breaking the trend line
e. All of the above

22. What action should you have not taken in February - March 2000 if you would have owned this index?

a. Look at fundamentals to determine earnings and economic data (inflation, interest rates) and valuations
b. Buy more on margin and buy deep out of the money calls
c. Start taking profits
d. Buy puts
e. None of the above

23. What technical tools should you have used to monitor the QQQs?

a. Trend lines
b. Short-term MA
c. Chart, pattern recognition
d. Trend line penetration filters
e. All of the above

24. Where is the highest volume on the chart?

a. When the down trend accelerates
b. When fear sets in
c. On the right side, down trend
d. All of the above
e. None of the above

Refer to the following chart to answer questions 25, 26

25. According to the chart above, approximately how long did the bull market last?

a. Approximately 10 years
b. Bull market still intact
c. 2 years
d. 5 years
e. Less than 1 year

26. Approximately how long did it take to retrace most of the bull market?

a. 10 years
b. Bull market still intact
c. 2 years
d. 5 years
e. Less than 1 year

27. What is the pattern of the chart below?

a. Head & shoulders reversal
b. V bottom
c. Bowl shape
d. Saucer
e. None of the above

28. What tool below would you not use to determine if a bear market is over?

a. Volume
b. Long-term MA
c. Chart, pattern recognition
d. Trend penetration filters
e. Use all of the above

29. The chart above is in a bull market?

a. Yes
b. No
c. Not enough information to determine
d. The chart is in a intermediate/consolidation pattern
e. None of the above

30. What normally happens at the end of a intermediate-term trend?

a. It may retrace part of its move
b. It may consolidate
c. It will go into a major reversal
d. a, b only
e. a,b,c

31. What is the average retracement?

a. 33%
b. 50%
c. 66%
d. None of the above

32. Which stock would probably retrace 66% if it broke its trend line? Assume this was an upward trend.

a. A stock with a high short interest
b. General Motors
c. A recent IPO that has doubled and has 25 million shares outstanding
d. A dividend paying stock
e. None of the above

33. Which is not part of the process of a 50% retracement?

a. Subtract the high from the low of the trend which is the move
b. Multiply the move times 50% which could be the typical retracement target
c. Subtract the retracement from the high of the trend
d. Place your buy or sell order in the area of the retracement
e. All of the above could be part of the retracement process

34. If a stock started at a low of 10 and went to high of 20 and consolidated in what area would you place a buy order?

a. 10
b. 16.7
c. 15
d. 13.4
e. None of the above

35. Prices are considered trending when they are?

a. Making higher highs and higher lows
b. Making lower highs and lower lows
c. Prices are moving sideways
d. a, b
e. a,b,c

36. Prices are considered trading when they are?

a. Making higher highs and higher lows
b. Making lower highs and lower lows
c. Moving sideways
d. a, b
e. a,b,c

37. What is the corresponding chart pattern when the economy is growing?

a. Making higher highs and higher lows
b. Making lower highs and lower lows
c. Moving sideways
d. Growth chart
e. None of the above

Match the patterns that are normally associated with the appropriate time frames

a. Long term b. Medium term c. Short-term d. None of the above

38. Gaps
39. Head & shoulders
40. Consolidation
41. Trending
42. Trading
43. Rectangles
44. Spikes
45. Flags
46. Triangles
47. Cup and handles

48. Oscillators in general help identify:

a. Volatility
b. Volume aberrations
c. Short-term overbought and oversold conditions
d. Price targets
e. All of the above

49. An oversold condition is a signal for a (an):

a. Exact profitable buying point
b. Potential entry point
c. Exact profitable selling point
d. Potential exit point
e. None of the above

50. An overbought condition is a signal for a (an):

a. Exact profitable buying point
b. Potential entry point
c. Exact profitable selling point
d. Potential exit point
e. None of the above

51. It is a good idea to:

a. Find one indicator master it and stick to it, as using too many indicators can cause "analysis leads to paralysis"
b. Use all the tools you can including fundamental analysis to give you confidence in your decisions.
c. Use the right tools for each situation including fundamental analysis to give you confidence in your trading and investing.
d. Use your intuition as your main decision making tool.
e. None of the above

52. Divergence in technical analysis normally means:

a. Prices and an oscillator are moving in opposite directions
b. Markets are moving in the opposite directions of global economies
c. Markets are moving in the opposite directions of the domestic economy
d. Not all industries are participating in a trend in the market
e. None of the above

53. Strong overbought or oversold stocks and markets (strongly trending prices) can remain strong trends and sometimes do not reverse (correct).

a. True
b. False

54. Which statement is false regarding overbought conditions?

a. They are bearish.
b. Prices will always fall.
c. They normally pertain to short-term conditions
d. They could provide a shorting opportunity
e. None of the above

55. Which statement is false regarding oversold conditions?

a. They are bullish
b. Prices will always rise
c. They pertain more to short-term conditions
d. They could provide a buying opportunity
e. None of the above

Match the indicator with its chart

56. Bollinger Bands

57. MACD

58. Rate of Change

59. Relative Strength Index

60. Stochastics

61. On Balance Volume

a.

b.

c.

d.

e.

f.

62. What does a Disparity Index measure?

a. Measures where a stock's closing price is relative to a given moving average.
b. Identifies weak stocks versus strong stocks
c. Can help us determine if the easy money in a move has been made
d. All of the above
e. None of the above

63. The Relative Strength Index (RSI) measures?

a. A stock's strength relative to the market.
b. Strength with volume.
c. The strength of prices relative to different time frames.
d. The strength of upward price movements versus downward moves over a given period.
e. None of the above.

64. When the RSI reading is above 70:

a. Prices are overbought and could be a sell signal
b. Prices are oversold and could be a buy signal
c. Is meaningful for long-term time frames only
d. Means that the stock is outperforming 70% of the stocks in the market
e. None of the above

65. When the RSI reading is below 30:

a. Prices are oversold and could be a buy signal
b. Prices are overbought and could be a sell signal
c. Is meaningful for long-term time frames only
d. Means that the stock is outperforming 30% of the stocks in the market
e. None of the above

66. What is the RSI default time frame for most free on line charting services and online brokerage services?

a. Most free services allow you to change the RSI indicator
b. 25 days
c. 14 days
d. 9 days
e. 5 days

67. How many profitable trading opportunities (shorts and longs) are there in the above SPY, RSI chart?

a. 0
b. More than 4
c. More than 8
d. More than 12
e. None of the above

68. MACD can be used for:

a. Identifying divergences in trends
b. Identifying convergences in trends
c. Identifying entry points
d. Identifying exit points
e. All of the above

69. Which is not a component of MACD?

a. MACD, trigger line
b. Histogram
c. MACD line
d. Zero line
e. All of the above are components of MACD

70. What is the MACD default on most free online charting services, online brokerage service?

a. 50 days
b. 12 for the 1st MA, 26 for the 2nd MA, 9 trigger line
c. 9 for the 1st MA, 18 for the 2nd MA, 5 MACD line
d. Most free service and online brokerage accounts allow changes to the MACD indicator
e. None of the above

71. MACD works best in:

a. Trading markets
b. Strongly trending markets
c. Bull markets
d. Bear market
e. All of the above

72. How many profitable trades, short and long, did the SPY, MACD chart above identify?

a. 0
b. More than 4
c. More than 8
d. More than 12
e. None of the above

73. Using the SPY and MACD chart above, what was MACD telling us about the topping formation that was being made during the January to March time frame?

a. It was signaling a buying opportunity
b. It was signaling convergence
c. It was signaling divergence
d. That a major bull market top was being formed
e. None of the above

74. Bollinger Bands (BB) can help identify the following except:

a. Entry and exit points
b. Volatility
c. Potential price targets
d. Convergence, divergence
e. All of the above

75. After BB contract prices normally:

a. Rally to the upside
b. Fall to the downside
c. Break out of its range
d. End their long-term trend
e. None of the above

76. What normally happens when the BB expand? Use the graph above to help you answer your question.

a. The companies revenues expand
b. Means the VIX is increasing
c. Prices reverse
d. Price direction is sustained
e. None of the above

77. Which is not a component of Stochastics?

a. %K
b. %D
c. 0 -100 scale
d. Histogram
e. All of the above are components of Stochastics

78. In strongly trending up markets Stochastics readings mostly are:

a. Oversold
b. Overbought
c. Diverging
d. Volatile
e. None of the above

79. In strongly trending down markets Stochastics readings mostly are:

a. Oversold
b. Overbought
c. Diverging
d. Volatile
e. None of the above

80. Stochastic could create a buy when:

a. When prices cross the zero line
b. Stochastics do not provide buy signals
c. When %K line moves from below 20 to above 20
d. When the %K line crosses above the D line
e. C & D

81. How many profitable trades, short and long, did the SPY, Stochastic chart above identify?

a. More than 1
b. More than 4
c. More than 8
d. More than 12
e. None of the above

82. How many profitable trades, short and long, did the KO, Stochastics chart above identify using the K% and D% crossing method?

a. 0
b. More than 4
c. More than 8
d. More than 12
e. None of the above

83. How many profitable trades, short and long, did the KO, Stochastic chart above identify? Use the %K line moving into overbought and oversold areas method.

a. 0
b. More than 4
c. More than 8
d. More than 12
e. None of the above

84. Market internals provides information regarding:

a. What insiders are doing
b. What market makers are doing
c. What regulators are doing
d. Breadth of the market
e. All of the above

85. Breadth of the market informs us:

a. Strong breadth is associated with wide participation of stocks in price movements.
b. Strong breadth in a bear market means the bear market will probably continue.
c. Weak breadth is associated with narrow participation of stocks in price movements.
d. Weak breadth in a bull market means the current up move may not be sustainable.
e. All of the above.

86. The Advance/Decline Line is associated with which Dow Tenet?

a. The markets discount everything
b. Volume confirms the trend
c. Buy low sell high
d. Got a hunch, bet a bunch
e. None of the above

87. The bullish percent can help determine:

a. The underlying strength of a trend
b. By definition the percent of bullish investors in the market
c. Sentiment
d. Target prices based on bullishness, strength in the market
e. All of the above

88. The Bullish Percent (BP) indicator provides sell signals when:

a. BP reading is 30
b. BP reading is 70
c. BP line drops 6% from a level above 70%
d. BP line drops 6% from a level above 30%
e. None of the above

89. Extremely high readings of TRIN often correlates to:

a. Divergences in the market
b. Convergences in the market
c. Very strong markets
d. Lows in the market
e. None of the above

90. The ticker symbol for a quote on TRIN is:

a. TRIN
b. TRIN
c. Depends on your quote service
d. All of the above
e. None of the above

91. In the last couple of years TRIN readings above 3 signaled:

a. A good buy signal
b. Divergence
c. Convergence
d. A good sell signal
e. None of the above

92. Many sentiment indicators are:

a. For professionals only
b. For institutions only
c. Contrarian indicators
d. Are the best TA indicators
e. None of the above

93. What normally happens when most sentiment indicators get to an extreme?

a. It means the economy is strong
b. It means the global economy is strong
c. It's a good time to buy
d. Prices tend to reverse
e. None of the above

94. There seems to be a _________ relationship between VIX and the market.

a. Non-correlated
b. Inverse
c. Correlated
d. Linking
e. None of the above

95. A high reading of the VIX is associated with:

a. A selling opportunity
b. Important market bottoms
c. A buying opportunity
d. a, b
e. b, c

96. When it comes to TA which emotion in the markets seems to have the strongest impact?

a. Love
b. Fear
c. Hate
d. Greed
e. None of the above

97. ____________ dominate the market.

a. Market makers
b. Individuals
c. Institutions
d. Foreigners
e. None of the above

98. When mutual cash level are above 7%, that usually means:

a. Historically it is a high level
b. Cash level can be fuel for strong rally
c. Mutual fund managers are bearish
d. Could be used as one of the indicators to buy at the bottom of a bear market
e. All of the above

99. A short interest ratio of 7.7:

a. Is a high level
b. Traders who have to cover could be fuel for strong rally
c. Is a sign that investors and traders are bearish
d. Could be used as one of the indicators to buy at the bottom of a bear market
e. All of the above

100. Put buyers can be:

a. Bearish
b. Hedging
c. Expecting a decline
d. Attempting to protect their position(s)
e. All of the above

101. A high reading above .9 for the Put/Call ratio is a good time to:

a. Stay on the side lines.
b. Prices are ready for a breakout, direction unknown.
c. Normally sell as a sell off is imminent.
d. Normally buy as a rally is imminent.
e. None of the above.

102. Sentiment indicators:

a. Includes what investors and traders are doing.
b. Includes what investor and traders are thinking.
c. Try to measure the important emotions of fear and greed.
d. Should be included in your decision making process.
e. All of the above.

103. Where can you find a wide variety of sentiment indicators including their explanations, readings?

a. People Magazine
b. Psychology Today
c. Wall Street Journal
d. http://www.21stcenturyalert.com/page/tcx/sentimentrader/
e. All of the above

104. Buy/Sell Pressure measures:

a. Overbought/Oversold conditions (5-day line)
b. The strength of an intermediate-term trend (20-day line)
c. Identifies stocks that are ready to be bought or sold
d. a and b
e. None of the above

105. When the Buy/Sell Pressure 20-day line:

a.Hits its upper Bollinger Band, then it's time to buy.
b.Hits its lower Bollinger Band, then a market low may be close at hand.
c.Hits its upper Bollinger Band, then the market may have exhausted itself to the upside.
d. a and b
e. b and c

106. When a stock's Relative Strength Line (stock price divided by the S&P 500 price)

a. is rising, price is showing good relative strength.
b. is rising, price is showing poor relative strength.
c. is falling, price is showing good relative strength.
d. is falling, price is showing poor relative strength.
e. a & b
f. a & d

107. Keeping track of Relative Strength can:

a. help in tracking how money is rotating in the market
b. help in assessing the market's underlying vigor
c. help in individual trade selection
d. All of the above.
e. None of the above.

108. Oliensis Volume Momentum (OVM) uses principles derived from all the below except:

a. Accumulation/Distribution
b. Candlestick Theory
c. True Range calculations
d. Pattern identification
e. All of the above.

109. In using the OVM line we look for:

a. Bullish divergences.
b. Bearish divergences.
c. Leading indications
d. Confirmations.
e. All of the above.

110. In our OVM Scatter a large bubble in the upper-right quadrant is:

a. Bullish
b. Bearish
c. Neutral
d. None of the above.

111. In our OVM Scatter a large bubble in the upper-left quadrant is:

a. Bullish
b. Bearish
c. Neutral
d. None of the above

112. In the Base Analyzer study a chart with severely contracted Bollinger Bands that shows a significant drying up of volume indicates:

a. That the company is ready to announce earnings
b. That the stock will stay stuck in a trading range for a long time to come
c. That interest has already dried up and that a surge in volume could push the stock into its next trending move.
d. All of the above.

113. Key-Launched Volume-Weighted Moving Averages (KL VWMA) often function as:

a. Support & resistance
b. Forecaster of price
c. Trend line and channel
d. All of the above.

114. A stock that breaks down below one KL VWMA is very likely to:

a. rally right back up through that KL VWMA.
b. drop down to the next KL VWMA.
c. double in price.
d. None of the above.

115. Where can you find Adam Oliensis's indicators?

a. The Wall Street Journal
b. Financial Times
c. Technical Analysis of Stocks and Commodities magazine
d. www.theagiletrader.com
e. None of the above.

116. The Mc Clellan Oscillator and Summation index is (are):

a. Short-term indicator
b. Medium-term indicator
c. Long-term indicator
d. All of the above.
e. None of the above.

117. The Mc Clellan Oscillator's purpose is to help traders determine:

a. Stocks that will double within a month.
b. Stocks that are guaranteed to a provide a positive return.
c. Overbought and oversold conditions.
d. Identify stocks that oscillate.
e. None of the above.

118. What reading of the McClellan Oscillator would produce a buy signal?

a. Below -100
b. Above 100
c. Above 120
d. Above -1200
e. None of the above

119. A strong rise above __________ on the Mc Clellan Summation Index is needed to confirm a new bull market.

a. 100
b. 1000
c. 200
d. 2000
e. None of the above.

120. A number below ____ according to the McClellan Summation Index is considered bearish.

a. 0
b. 100
c. 1000
d. 200
e. 2000

121. The Essential indicator(s) used in the McClellan Oscillators is/are:

a. Volume
b. Time
c. Advance/Decline numbers
d. Put/Call ratio
e. All of the above

122. The Mc Clellan Summation Index help(s) identify(s):

a. Direction
b. Momentum
c. Divergences
d. Major market reversals
e. All of the above.

123. The best way(s) to access the Mc Clellan Oscillartors is/are:

a. The Wall Street Journal
b. Barron's
c. www.21stcenturyalert.com/page/tcx/mcclellan/latest.pdf
d. www.21stcenturyalert.com
e. c and d

124. Which is not a tool that helps identify price targets?

a. Measuring gaps
b. Retracements
c. Measuring Technique
d. Lower and Upper BB
e. Sentiment indicators

125. Which is not a tool that helps identify buy and sell signals?

a. Trend lines
b. Moving Averages
c. Stochastics
d. Filters
e. All of the above tools can give help with buy and sell decisions.

126. Using the decision grid above what action would you take?

a. The grid is suggesting a bull market is ending.I should short the market and or reduce my exposure to the market.
b. A bear market is ending. I should become fully invested.
c. There is not enough information. I should do more research.
d. The market looks as though it's still in a bull market. I should hold.

127. Using the decision grid above what action would you take?

a. The grid is suggesting a bull market is ending. I should short the market and/or reduce my exposure.
b. A bear market is ending. I should become fully invested
c. There is not enough information. I should do more research
d. The market looks as though it's still in a bull market. should hold.

128. Using the decision grid above what action would you take?

a. The grid is suggesting a bull market is ending.I should short the market and or reduce my exposure to the market.
b. A bear market is ending. I should become fully invested.
c. There is not enough information. I should do more research.
d. The market looks as though it's still in a bull market. I should hold.

129. Which set of tools guarantees its forecasts?

a. Pattern recognition
b. Oscillators
c. Sentiment indicators
d. All of the above
e. There are no TA or fundamental tools that can accurately forecast the future

130. If I master the tools, indicators and concepts of this course, I will gain more experience it should help me become a better investor/trader.

a. True
b. False

131. This course will provide me with the only knowledge that I will need to become a successful trader and investor.

a. True
b. False