Technical versus Fundamental Analysis

Question 1

A stock collapsing on better-than-expected earnings:

a) is very unusual and is generally a buying opportunity
b) is caused by high-frequency traders
c) is called market expectation
d) all of the above

Answer 1

c) is called market expectation

Question 2

Stock indexes rallying after a bad unemployment number is:

a) highly unusual and is generally a selling opportunity
b) caused by high-frequency traders
c) called market expectation
d) all of the above

Answer 2

c) called market expectation

Question 3

Fundamental traders generally:

a) only look at supply and demand for a stock
b) are predictive in nature
c) are reactive in nature
d) never consider technical factors

Answer 3

b) are predictive in nature
d) never consider technical factors * 1/2 credit

Question 4

Fundamental traders:

a) examine balance sheets
b) watch EPS levels
c) watch inventory levels
d) all of the above

Answer 4

d) all of the above

Question 5

Fundamental traders never take into consideration:

a) overbought over sold indicators
b) high-frequency trading volume
c) moving averages
d) none of the above

Answer 5

d) none of the above

Question 6

Technical traders never take into consideration:

a) P/E ratios of stocks they are looking to buy
b) overbought or oversold conditions
c) price retracement levels
d) media buying or selling advice

Answer 6

d) media buying or selling advice
a) P/E ratios of stocks they are looking to buy * 1/2 credit

Question 7

Technical traders always:

a) follow the trend
b) look at key levels to trade
c) countertrend trade media advice
d) take profits too early

Answer 7

b) look at key levels to trade

Question 8

Technical traders usually buy:

a) double bottoms
b) breakouts from congestion
c) blowoff bottoms
d) all of the above

Answer 8

d) all of the above

Question 9

Technical traders believe that when price discovery occurs:

a) the market is in equilibrium
b) that value has been exchanged
c) high-frequency traders are causing the price discovery
d) both a and b

Answer 9

d) both a and b

Question 10

Which of the following do technical traders believe?

a) retracement numbers are almost always correct.
b) Liquid markets offer the best chance for profit.
c) High-frequency traders are rigging the markets.
d) Selling large rallies rarely fails.

Answer 10

b) Liquid markets offer the best chance for profit.