Q1. The resistance level signifies the price at which a stock's supply would be expected to:

A)   increase substantially.

B)   decrease substantially.

C)   cause the stock price to "break out".

Q2. Which of the following would signal a technical analyst to expect a sharp increase in demand for a stock?

A)   The spread between the yield on high-quality and low-quality bonds widens.

B)   Price movement into the analyst's support level range.

C)   Movement into the analyst's resistance level range.

Q3. An indicator calculated as the ratio of the average yield of 10 top-grade corporate bonds to the average yield on Dow Jones 40bond is known as:

A)   relative strength index.

B)   confidence index.

C)   breadth index.

Q4. Which one of the following would be a bullish signal to a smart-money technical analyst?

A)   Average-quality bond yields move closer to high-quality bond yields.

B)   The T-bill Eurodollar spread widens.

C)   The debit balances in brokerage accounts decrease.

Q5. When technical analysts say a stock has good "relative strength," they mean the:

A)   recent trading volume in the stock has exceeded the normal trading volume.

B)   ratio of the price of the stock to a market index has trended upward.

C)   stock has performed well compared to other stocks in the same risk category as measured by beta.

答案和详解如下：

Q1. The resistance level signifies the price at which a stock's supply would be expected to:

A)   increase substantially.

B)   decrease substantially.

C)   cause the stock price to "break out".

Correct answer is A)

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 resistance level tends to develop after a stock has experienced a steady decline from a higher price level. Technicians believe that the decline in price will cause some investors who acquired the stock at a higher price to look for an opportunity to sell it near their break-even points. Therefore, the supply of stock owned by investors is overhanging the market. When the price rebounds to the target price set by these investors, this overhanging supply of stock comes to the market and dramatically reverses the price increase on heavy volume.

Q2. Which of the following would signal a technical analyst to expect a sharp increase in demand for a stock?

A)   The spread between the yield on high-quality and low-quality bonds widens.

B)   Price movement into the analyst's support level range.

C)   Movement into the analyst's resistance level range.

Correct answer is B)

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 experience a steady decline from a higher price level. Technicians believe that, at some price below the recent peak, other investors will buy who did not buy prior to the first price increase and have been waiting for a small reversal to get into the stock. When the price reaches this support price, demand surges and price and volume begin to increase again.

Generally, a resistance level tends to develop after a stock has experienced a steady decline increase from a higher lower price level. Technicians believe that the decline increase in price will cause some investors who acquired the stock at a higher lower price to look for an opportunity to sell it near their break-even points. Therefore, the supply of stock owned by investors is overhanging the market. When the price rebounds to the target price set by these investors, this overhanging supply of stock comes to the market and dramatically reverses the price increase on heavy volume.

When the spread between high quality and low quality bonds widens, the confidence index decreases, indicating a bearish market (and likely decreased demand for the stock).

Q3. An indicator calculated as the ratio of the average yield of 10 top-grade corporate bonds to the average yield on Dow Jones 40bond is known as:

A)   relative strength index.

B)   confidence index.

C)   breadth index.

Correct answer is B)

This is the definition of the confidence index. In periods of confidence, investors sell quality bonds and buy lower quality bonds looking for yield.  Quality bond prices will fall and their yields rise.  Lower grade bond prices will rise and their yields fall.  Thus, the CI ratio will increase during periods of confidence (e.g., from 0.07/0.10 = 0.7 to 0.08/0.09 = 0.89).  Note that the CI moves in the opposite direction of yield spreads.  In periods of confidence, yield spreads narrow and the CI gets bigger.  In periods of pessimism, spreads widen and the CI falls.

Q4. Which one of the following would be a bullish signal to a smart-money technical analyst?

A)   Average-quality bond yields move closer to high-quality bond yields.

B)   The T-bill Eurodollar spread widens.

C)   The debit balances in brokerage accounts decrease.

Correct answer is A)

Narrowing quality spreads cause the Barron's Confidence Index to increase, a bullish smart-money indicator. Smart-money technicians reason that in times of international crisis, the TED spread will widen as money flows to a safe haven in U.S. T-bills. Decreasing debit balances in brokerage accounts is a bearish indicator to smart-money technicians.

Q5. When technical analysts say a stock has good "relative strength," they mean the:

A)   recent trading volume in the stock has exceeded the normal trading volume.

B)   ratio of the price of the stock to a market index has trended upward.

C)   stock has performed well compared to other stocks in the same risk category as measured by beta.

Correct answer is B)

This is the definition of relative strength. When the ratio of the stock price to the market price increases over time, the stock is out-performing the market.

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