CTA Volume Analysis & Market Breadth

Question 1

In technical analysis, what does 'volume precedes price' mean?

Accepted Answer

Changes in volume patterns often signal upcoming price direction shifts

Answer

Volume always increases before a price move

Answer

High volume causes price to rise

Answer

Price moves are proportional to volume

Question 2

On-Balance Volume (OBV) is calculated by:

Accepted Answer

Adding volume on up days and subtracting volume on down days cumulatively

Answer

Averaging daily volume over 14 periods

Answer

Multiplying price by volume

Answer

Dividing price change by volume

Question 3

What does 'negative volume divergence' signal when price reaches new highs?

Accepted Answer

Weakening buying pressure, suggesting the uptrend may be losing momentum

Answer

A bullish confirmation of the trend

Answer

Increased institutional buying

Answer

A breakdown below a key support level

Question 4

The Advance-Decline Line (A/D Line) measures:

Accepted Answer

The cumulative difference between advancing and declining issues over time

Answer

The ratio of advancing stocks to declining stocks on a single day

Answer

The percentage change of a market index

Answer

Volume on up days versus down days

Question 5

What is the significance of 'volume climax' or 'selling climax'?

Accepted Answer

Extremely high volume on a sharp decline that may signal exhaustion of sellers and a potential bottom

Answer

It confirms a strong ongoing downtrend

Answer

A breakout from a consolidation zone

Answer

A period of very low volume near a price high

Question 6

Which breadth indicator measures the percentage of stocks trading above their 200-day moving average?

Accepted Answer

The percentage of stocks above MA200

Answer

The Arms Index (TRIN)

Answer

The McClellan Oscillator

Answer

The New Highs-New Lows Index