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org CMT Program CMT Institute Knowledge Base Volume 1, Issue 10

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Special Edition CMT Level 3 Issue!

Letter from the Editor

In case you are wondering why the CMT 3 exam registration closes a
full week before the CMT 1 and CMT 2 exam registration window
closes, the reason is simple: it takes time for Prometric to send the
chart books to each exam center. Prometric needs to know in advance
where the chart books are to be sent as well as to know how many to
send to each center. Administrative Notes
What you should find at the exam center:
Don't Miss Out!
Each CMT 3 candidate will be given a paper chart book at the exam center. The charts are both
on screen and in a chart book. If you do not receive a chart book at your exam center, please alert REGISTRATION FOR CMT LEVELS 1 &
the proctor that you are to be given a chart book. If one is not available, call Marie Penza 2 CLOSES ON APRIL 23RD!
(646.652.3300) at the office to reschedule your exam. If you choose to take the exam without the
paper chart book you may do so. However, I do not advise you to do that. We provide the chart Sign up today to ensure your
books to Prometric and they send them to the exam centers. Obviously you cannot draw lines on
preferred time, date, and location!
the electronic version of the exam chart book; however, you may draw and write on the paper
chart books. Graders will not see the paper chart books because they are shredded after your Contact Marie Penza, 646-652-3300,
use. Regarding other items allowed at the exam, you may bring both a simple calculator and a for information on the CMT Program
ruler. Again, if you are not allowed to do so, please call the office to reschedule the exam. A and/or if you're having trouble
simple calculator is on the exam screen for your use. scheduling your exam for Prometric.
For detailed instructions on how you
As the CMT 3 registration is now closed, I have elected to devote this newsletter exclusively for can register online, please click here .
CMT 3 candidates but have sent it to all candidates for future reference.
Test Dates
- Jeanette Young, CMT, CFP
CMT Program Director The Spring 2010 CMT Exams will be
jeanette@mta.org held from April 29, 2010 through May
8, 2010.

Registration Closing Dates

Registration for Levels 1 and 2 closes

Have a Question? on April 23, 2010.

I am available for your questions and suggestions! Please send questions that you would like Recommended Reading Lists
answered to me at: jeanette@mta.org. I am also available for immediate questions by phone at
646-652-3300. If I don't post the answer here for all to see, rest assured I will answer them directly
with you by e-mail. z CMT Exam Level 1

z CMT Exam Level 2

z CMT Exam Level 3

Ask the Director

Guide to Sponsorship:
Attend the Symposium!

Many MTA Affiliates often ask me for

help identifying sponsors. Aside from
 "combing" through the list of current
"Members Willing to Sponsor Others,"
I normally suggest attending local
chapter meetings, if available. What's
even better than networking at a local
chapter meeting -- How about the
MTA Annual Symposium!

This event will feature over 100

attendees, many of which are
Members that might be a great fit as a
potential sponsor for you. What better
Answer: Go to the Knowledge Base (KB) and review the literature on Elliott Wave (EW). The good way to network, learn from industry
news about Elliott Wave is that even if you get zero points on that question, while obviously not leaders, find potential sponsors and
recommended, you could still pass the exam. The Elliott Wave question for the current exam has further your knowledge of TA!
been made clearer. For the exam: know Elliott Wave basics and understand the various waves
and rules that apply to those waves. We do give partial credit for Elliott Wave as we do any exam
question. Go to the Knowledge Base to see if that helps you. Yes, the practice Elliott Wave If you are interested in attending this
question is likely to give you a headache. The new question is much better and user-friendly. event you can register online, click
Remember, level three is application, not regurgitation of facts. here, or you can contact me at 646-
652-3300 and I can help register your
over the phone or answer any
questions you might have.
The following questions were answered by our Subject Matter Expert
Julia Bussie... Cassandra Townes
Member Services Assistant
cassandra@mta.org
646-652-3300

Answer: There is no way a count of 7 would be acceptable. If there is an extension, the count
would be 9 or in the case of two motive waves extending, which does happen occasionally, the
count would be 13.

Answer: The clue here is "what is the form of the preceding completed wave structure."

If the preceding move is a completed 5-wave pattern of a larger degree, then you know the market
is working on a correction. The 5-3-5 pattern may be a completed correction or the first portion of a
more complex correction.

If the preceding move is a completed corrective pattern, then the 5-3-5 pattern you are questioning
is either a new motive wave or the second portion of a more complex correction. One way to help
distinguish between the two is to determine the Fibonacci relationships between the 5-3-5 pattern
under discussion and the previous wave. In my experience, an internal wave of a new motive wave
will show few Fibonacci relationships to the previous corrective action.

Always keep the larger picture in mind.

Practice, Practice, Practice:
Sample Questions with the Correct Answer

CMT Exam Level 3

Discuss what, if any, ethical violations may have occurred.

Henry McAdams, a member of the Market Technicians Association, is a staff technical analyst at
the Wavertree Fund, where he has been employed for more than five years. He is part of a larger
team that is comprised of three analysts and support staff. The firm employs 25 people but there
have been rumors that it may be sold to a larger bank, which already has a technical analysis
team. Henry has been reviewing charts for his daily comment. While doing so, he notices a chart
that he believes is attractive. Henry immediately goes out and establishes a position in his own
account.

1. Two weeks later, the chart still looks attractive. The fundamental analyst at Wavertree
reiterates his buy on the stock and Henry writes a technical opinion based on his research
without disclosing his personal position.

This is a violation of Rule 1.

2. Within the last three months, Henry has received notification that he has passed Level 3
and is now entitled to the CMT designation. However, he has not made any changes on
his templates

This is a violation of Rule 9.

3. Henry’s brother-in-law Joe is a software developer with a major company. Joe and a few
others have begun a start-up that provides intra-day services to research analysts. Joe
wants to borrow the MTA directory so that he can prospect the membership.

This is a violation of Rule 1.

4. Henry’s colleague Mark has had a great deal of success with a new trading system that he
has been using for about two weeks. When pressed to see exactly how this new system
works, Mark responds, “I know it’s going to work, just trust me.”

This is a violation of Rule 3.

5. At the same time, Mark contributes a piece to Henry’s letter. In it, Mark has a lengthy and
detailed discussion about an arcane topic. Henry recognizes some of the passages in it as
part of an out-of-print book on the subject, but Mark gives no attributions.

This is a violation of Rule 8.

6. While looking through the Wall Street Journal, Henry notices that one of the analysts from
the potentially acquiring bank is quoted as making a comment that is contrary to Henry’s
published opinion. “What chart is that guy looking at? He must be blind!” Henry asks, “That
guy is so inept, he couldn’t pick a buy idea if it came up and bit him.”

This is a violation of Rule 4.

7. A reporter from the New York Times calls and speaks with Henry to verify if it is true that
the Director of Wavertree is currently involved in a messy divorce from his socialite wife
and will need to liquidate his holdings in Wavertree fund to pay the alimony. Henry
discussed the matter with the reporter.

This is a violation of Rule 6.

8. Based on technical deterioration in chart patterns along with the need to raise funds to
purchase a house, Henry has decided to liquidate the position he established earlier. In an
effort to squeeze out every cent that he possibly could, Henry publishes a bullish opinion
on the stock. Six hours later, he enters a market order to sell.

This is a violation of Rules 2 and 7.

CMT Exam Level 3

Answer: Relative strength is a measurement of a security price movement versus some other
security, industry or index. It is used to determine how a security is performing relative to
something else. (1pt) It can be used as a confirmation indicator. (2Pts.)

Relative Strength Index (RSI) measures a security’s momentum against itself. It is used to
determine whether or not a security is overbought or oversold, trending in a bull or bear market
versus behaving in more of a trading range environment, and it can be used as a confirmation tool.
(3Pts)

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