mcqs to memorize for the final

Question 1

Which of the following is the most important aspect of a cycle in studying the relationship between cycles of different lengths?

a. Phase
b. Period
c. Amplitude

Answer 1

a. Phase

Question 2

With regard to cycle analysis, translation is best described as

a. the distance between peaks.
b. the distance between troughs.
c. to the left when the peak is beyond the halfway point.
d. useful in checking where the trend direction is headed or if it is changing

Answer 2

d. useful in checking where the trend direction is headed or if it is changing

Question 3

A complete Elliott Wave cycle is composed of how many subwaves?

a. 3
b. 5
c. 8
d. 13

Answer 3

c. 8

Question 4

Which of the following would LEAST likely be a continuation pattern?

a. Flag
b. Ascending triangle
c. Broadening formation
d. Inverse head and shoulders

Answer 4

c. Broadening formation

Question 5

According to Dow Theory, secondary corrections can most likely be replaced by a

a. flag.
b. line.
c. wedge.
d. triangle.

Answer 5

b. line.

Question 6

What is most likely indicated when Bollinger Bands narrow?

a. A stock is ready for a rally.
b. A stock is ready for a decline.
c. A stock’s volatility has increased.
d. A stock’s volatility has decreased.

Answer 6

d. A stock’s volatility has decreased.

Question 7

Dow Theory uses

a. low prices.
b. high prices.
c. closing prices.
d. average daily prices.

Answer 7

c. closing prices.

Question 8

Using moving averages to signal buy/sell decisions can result in a number of whipsaws in

a. up trending markets.
b. down trending markets.
c. sideways trending markets.

Answer 8

c. sideways trending markets.

Question 9

A stock trades in a range between 51 and 55 for ten days and then moves higher. If you had been charting the stock with a three-box reversal point and figure chart, with two points assigned per box, what would the horizontal count be?

a. 10 points
b. 30 points
c. 60 points
d. There would be no horizontal count.

Answer 9

d. There would be no horizontal count.

Question 10

Which of the following is usually associated with major market tops?

a. A pennant pattern
b. Ascending triangles
c. An extended third wave
d. A broadening formation

Answer 10

d. A broadening formation

Question 11

As a general rule, in rectangle, triangle, flag and pennant patterns, volume most likely

a. increases as the pattern nears completion.
b. decreases as the pattern nears completion.
c. remains fairly consistent as the pattern nears completion

Answer 11

b. decreases as the pattern nears completion.

Question 12

Which of the following types of gaps is LEAST likely to be filled when it occurs with high volume?

a. Common
b. Runaway
c. Breakaway
d. Exhaustion

Answer 12

c. Breakaway

Question 13

The Directional Movement Indicator (DMI) can be described as two

a. moving averages of the lows.
b. moving averages of the highs.
c. lines tracking higher highs and lower lows to determine trend.
d. lines placed two standard deviations above or below a moving average.

Answer 13

c. lines tracking higher highs and lower lows to determine trend.

Question 14

Regarding trends, which of the following statements is NOT correct?

a. Always trade with the trend.
b. A trendline break is at least a warning of a changing trend.
c. Breakouts from support/resistance are usually a change in trend.
d. The longer the trend, the more difficult it is to identify its reversal.

Answer 14

d. The longer the trend, the more difficult it is to identify its reversal.

Question 15

In point and figure charting, the ability to obtain price objectives through the use of horizontal count is a principal advantage of the

a. one-box reversal chart.
b. five-box reversal chart.
c. three-box reversal chart.

Answer 15

a. one-box reversal chart.

Question 16

Which of the following statements is NOT correct? An equally-weighted average

a. is a dollar weighted average.
b is also called an unweighted average.
c. is the methodology used to construct the S&P 500 Index.
d. most closely represents how the typical investor goes about organizing a portfolio.

Answer 16

c. is the methodology used to construct the S&P 500 Index.

Question 17

Symmetrical triangles

a. are also called coils.
b. are usually broadening patterns.
c. represent the acceleration of an existing trend.

Answer 17

a. are also called coils.

Question 18

Which of the following statements regarding moving averages is NOT correct? Longer term moving averages

a. give fewer buy and sell signals than shorter term moving averages.
b. are better at giving signals at major tops than shorter term moving averages.
c. give back a lot more when the trend reverses than shorter term moving averages.

Answer 18

b. are better at giving signals at major tops than shorter term moving averages.

Question 19

Symmetrical triangle price patterns should generally be accompanied by

a. consistent volume within the pattern.
b. a gradual decline in volume until the breakout.
c. heavier volume in the direction of the eventual breakout.
d. no discernible difference in volume until after the breakout occurs.

Answer 19

b. a gradual decline in volume until the breakout.

Question 20

The primary use of a candlestick pattern is to

a. determine if a market is in a bull or bear market.
b. define the primary, intermediate, and short-term trends.
c. identify indications of both reversal and continuation patterns.
d. define the intermediate and short-term trends, but not the primary trend.

Answer 20

c. identify indications of both reversal and continuation patterns

Question 21

All of the following are momentum oscillators EXCEPT the

a. stochastic oscillator.
b. advance/decline line.
c. relative strength index (RSI).
d. Moving Average Convergence-Divergence (MACD).

Answer 21

b. advance/decline line.

Question 22

The objective of Dow Theory is to determine

a. the timing of market bottoms.
b. changes in market psychology.
c. the likelihood of volume reversals.
d. the primary direction of the stock market.

Answer 22

d. the primary direction of the stock market.

Question 23

The advance-decline line is used to indicate

a. market breadth.
b. price momentum.
c. volume momentum.
d. a moving average crossover point.

Answer 23

a. market breadth.

Question 24

The Kondratieff Wave extends for a period of approximately

a. 13 years.
b. 54 years.
c. 13 weeks.

Answer 24

b. 54 years.

Question 25

Which of the following is NOT correct regarding speed resistance lines?

a. They divide a trend into thirds.
b. They are used to measure percentage retracements.
c. They measure the rate of ascent or descent of a trend.
d. They measure rallies and declines using only closing prices.

Answer 25

d. They measure rallies and declines using only closing prices.

Question 26

Which chart type is more commonly used for displaying relative strength between a stock and the market?

a. Bar
b. Line
c. Candlestick
d. Point and figure

Answer 26

b. Line

Question 27

The parameters of a cycle are

a. price, volume and flow.
b. length, width and breadth.
c. form, perimeter and wave.
d. amplitude, period and phase.

Answer 27

d. amplitude, period and phase.

Question 28

A sell signal is normally given when a

a. shorter length moving average remains above a longer length moving average.
b. longer length moving average remains above a shorter length moving average.
c. shorter length moving average crosses a longer length moving average from above.
d. longer length moving average crosses a shorter length moving average from above.

Answer 28

c. shorter length moving average crosses a longer length moving average from above.

Question 29

Oscillators are used to alert the analyst to

a. volume divergences.
b. continuation patterns.
c. extended rallies and corrections.
d. overbought or oversold conditions.

Answer 29

d. overbought or oversold conditions.

Question 30

An extreme overbought reading on a momentum indicator in the early stages of a rally

a. shows that the market is ready to correct.
b. indicates that the rally is strong and will probably carry further.
c. is a clear indication that the pace of the rally is about to accelerate.
d. is a clear indication that the pace of the rally is about to slow down.

Answer 30

b. indicates that the rally is strong and will probably carry further

Question 31

Which type of chart is usually considered best suited for establishing price targets based on a horizontal measurement?

a. Line charts
b. Daily bar charts
c. Candlestick charts
d. Point and figure charts

Answer 31

d. Point and figure charts

Question 32

The January Effect refers to a seasonal tendency in which

a. returns for the year tend to be positive when January returns are positive.
b. returns for the year tend to be negative when January returns are positive.
c. large capitalization stocks outperform small capitalization stocks in January.
d. small capitalization stocks outperform large capitalization stocks in January.

Answer 32

d. small capitalization stocks outperform large capitalization stocks in January.