Trading Strategies & Market Timing Flashcards
7 cards from real CPT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Trading Strategies & Market Timing flashcards as text
The 'triple witching' event, which occurs four times per year, refers to the simultaneous expiration of:
Answer: Stock options, stock index futures, and stock index options
Triple witching is the simultaneous expiration of stock options, stock index futures, and stock index options on the third Friday of March, June, September, and December.
A trader employing a 'momentum ignition' detection strategy would look for which combination of signals to identify potentially manipulated short-term moves?
Answer: Very high volume spike on a tiny price move followed by reversal
Momentum ignition often shows a sharp volume spike with a small price move followed by quick reversal, suggesting an attempt to trigger stop orders rather than genuine demand.
In the context of sector rotation strategy, which sectors are traditionally considered 'early cycle' and tend to outperform as the economy exits a recession?
Answer: Financials, consumer discretionary, and industrials
Financials, consumer discretionary, and industrials are classic early-cycle outperformers because they benefit directly from credit expansion and rising consumer spending at the start of a recovery.
A 'dead cat bounce' in technical analysis refers to:
Answer: A brief, temporary recovery in a declining asset before the downtrend resumes
A dead cat bounce is a short-lived price recovery in a downtrend that fails to signal a true reversal and is followed by continued decline.
When a trader applies a 'trailing stop' strategy on a long position, the stop level:
Answer: Moves upward as the price rises but does not move down if price falls
A trailing stop rises with price to lock in profits but remains in place if price falls, triggering an exit only when price drops back to the stop level.
The 'January Barometer' is a seasonal trading concept suggesting that:
Answer: January's stock market performance predicts the direction for the rest of the year
The January Barometer holds that as January goes, so goes the year — a positive January historically correlates with positive full-year returns.
A trader using Fibonacci retracement levels would typically place potential support levels at which percentages after an upward price move?
Answer: 23.6%, 38.2%, and 61.8%
The core Fibonacci retracement levels used in technical trading are 23.6%, 38.2%, and 61.8%, derived from the Fibonacci sequence ratios.