26.Which of the following is a bullish indicator to a contrarian?

A)   The mutual fund cash position is low (4%).

B)   The investment advisory opinions ratio is low (20%).

C)   The OTC to NYSE volume ratio is high (>112%).

D)   Investors credit balances in brokerage accounts are rising.

27.The point where technicians expect a substantial increase in the demand for a stock to occur is called a:

A)   resistance level.

B)   intermediate reversal.

C)   support level.

D)   break-out point.

28.Which of the following statements about contrary-opinion and smart money technicians is most accurate?

A)   If mutual funds cash holdings are more than 13% of total fund assets, smart-money technicians are bullish.

B)   The CBOE put call ratio is 0.75. Contrary-opinion technicians are bullish.

C)   When the ratio of short sales by specialists to total NYSE short sales is at 0.20, smart-money technicians are bearish.

D)   When the yield spread on high quality versus lower-quality bonds narrows, the confidence index decreases and smart-money technicians become bullish.

29.Which of the following statements about contrary-opinion and smart money technicians is CORRECT?

A)   A contrary-opinion technician is bearish when the specialist short sale ratio falls below 30%.

B)   A smart-money technician buys when futures traders are bullish on stock index futures.

C)   A smart-money technician takes a bullish position when the yield spread on high quality versus lower-quality bonds increases from 75 basis points to 150 basis points.

D)   When investor credit balances are falling, contrary-opinion technicians are bearish.

答案和详解如下：

26.Which of the following is a bullish indicator to a contrarian?

A)   The mutual fund cash position is low (4%).

B)   The investment advisory opinions ratio is low (20%).

C)   The OTC to NYSE volume ratio is high (>112%).

D)   Investors credit balances in brokerage accounts are rising.

The correct answer was D)    

Rising investor credit balances in brokerage accounts indicate that investors are bearish, and thus contrarians are bullish. The other choices are examples of situations in which contrarians would be bearish. An OTC/NYSE ratio over 112% signals that the market is bullish, so contrarians are bearish. Low mutual fund cash balances indicate that mutual fund managers are investing (or are bullish), and again, contrarians are bearish.

27.The point where technicians expect a substantial increase in the demand for a stock to occur is called a:

A)   resistance level.

B)   intermediate reversal.

C)   support level.

D)   break-out point.

The correct answer was C)

Support and resistance levels. Most stock prices remain relatively stable and fluctuate up and down from their true value. The lower limit to these fluctuations is called a support level – the price range where a stock appears cheap and attracts buyers. The upper limit is called a resistance level – the price range where a stock appears expensive and initiates selling.

Generally, a support level will develop after a stock has increased in price and profit taking occurs. Technicians believe that, at some price below the recent high, other investors will buy who did not buy prior to the first price increase and have been waiting for a small price decline to buy. When the price reaches this support price, demand increases substantially and price and volume begin to increase yet again.

28.Which of the following statements about contrary-opinion and smart money technicians is most accurate?

A)   If mutual funds cash holdings are more than 13% of total fund assets, smart-money technicians are bullish.

B)   The CBOE put call ratio is 0.75. Contrary-opinion technicians are bullish.

C)   When the ratio of short sales by specialists to total NYSE short sales is at 0.20, smart-money technicians are bearish.

D)   When the yield spread on high quality versus lower-quality bonds narrows, the confidence index decreases and smart-money technicians become bullish.

The correct answer was B)

When the CBOE put call ratio is equal to or greater than 0.50, this suggests that investors are bearish and thus contrary-opinion technicians are bullish.

The other statements are incorrect. The mutual fund ratio is not an indicator for smart money technicians. When the mutual fund ratio is equal to or greater than 0.13, it means that investors are bearish and contrary-opinion technicians are bullish. The statement beginning, “When the yield spread on high quality versus lower-quality bonds narrows,” is partially true. A narrowing yield spread is a bullish sign to smart-money technicians, but because it means that the confidence index has increased.

Summary of the indicators for contrary-opinion and smart money technicians:

        Contrary-opinion technicians (trade the opposite of the mass of general investors):

§         Mutual Fund Ratio (mutual fund cash/total mutual funds)

§         Investor credit balances in brokerage accounts

§         Investment Advisory Opinions (bearish opinions/total opinions)

§         OTC (speculative) versus  New York Stock Exchange (less speculative) volume

§         CBOE Put/Call ratio

§         Futures traders bullish on stock index futures

        Smart-money technicians (follow the professional investors):

§         Confidence index (yield on high-quality bond/yield on average-quality bonds). Note: CFA Institute has been know to use wording about yield spreads (which move in the opposite direction of the confidence index) to test your understanding of this indicator.

§         T-bill – Eurodollar yield spreads

§         Short Sales by Specialists (short sales by specialists / total NYSE short sales)

§         Debit (margin) balances in brokerage accounts

29.Which of the following statements about contrary-opinion and smart money technicians is CORRECT?

A)   A contrary-opinion technician is bearish when the specialist short sale ratio falls below 30%.

B)   A smart-money technician buys when futures traders are bullish on stock index futures.

C)   A smart-money technician takes a bullish position when the yield spread on high quality versus lower-quality bonds increases from 75 basis points to 150 basis points.

D)   When investor credit balances are falling, contrary-opinion technicians are bearish.

The correct answer was D)

When investor credit balances are falling, investors are bullish, so contrary-opinion technicians are bearish.

The other statements are incorrect. Although a specialist short sale ratio less than 30% indicates a bull market, this indicator is followed by smart money technicians. When the yield-differential between high quality and lower-quality bonds widens, the confidence index decreases, and smart-money technicians would be bearish. A widening yield spread is a bearish sign to smart-money technicians because it means that the confidence index has decreased. When 75% or more of futures traders are bullish on stock index futures, contrary-opinion technicians become bearish and sell.

Summary of the indicators for contrary-opinion and smart money technicians:

        Contrary-opinion technicians (trade the opposite of the mass of general investors):

§         Mutual Fund Ratio (mutual fund cash/total mutual funds)

§         Investor credit balances in brokerage accounts

§         Investment Advisory Opinions (bearish opinions/total opinions)

§         OTC (speculative) versus  New York Stock Exchange (less speculative) volume

§         CBOE Put/Call ratio

§         Futures traders bullish on stock index futures

        Smart-money technicians (follow the professional investors):

§         Confidence index (yield on high-quality bond/yield on average -quality bonds). Note: AMIR® has been know to use wording about yield spreads (which move in the opposite direction of the confidence index) to test your understanding of this indicator.

§         T-bill – Eurodollar yield spreads

§         Short Sales by Specialists (short sales by specialists / total NYSE short sales)

§         Debit (margin) balances in brokerage accounts