CMT LEVEL I CURRICULUM

Table of Contents
 SECTION I
CHART DEVELOPMENT AND ANALYSIS

Chapter 1 THE BASIC PRINCIPLE OF TECHNICAL ANALYSIS—THE TREND

CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. How Does the Technical Analyst Make Money?

2. What Is a Trend?
3. How Are Trends Identified?
4. Trends Develop from Supply and Demand
5. What Trends Are There?
6. What Other Assumptions Do Technical Analysts Make?

Chapter 2 DOW THEORY

CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. Dow Theory Theorems

2. Criticisms of the Dow Theory

Chapter 3 HISTORY AND CONSTRUCTION OF CHARTS

CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. History of Charting
2. What Data Is Needed to Construct a Chart?
3. What Types of Charts Do Analysts Use?
4. What Type of Scale Should Be Used?

Chapter 4 TRENDS — THE BASICS

CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. Trend—The Key to Profits

2. Trend Terminology
3. Basis of Trend Analysis—Dow Theory
4. How Does Investor Psychology Impact Trends?
5. How Is the Trend Determined?
6. Determining a Trading Range
7. Directional Trends (Up and Down)
8. Other Types of Trend Lines

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 Chapter 5 BREAKOUTS, STOPS, AND RETRACEMENTS
CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. Breakouts
2. Stops
3. Retracements

Chapter 6 MOVING AVERAGES

CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. What Is a Moving Average?

2. How Is a Simple Moving Average Calculated?
3. What Other Types of Moving Averages Are Used?
4. Strategies for Using Moving Averages
5. What Is Directional Movement?
6. What Are Envelopes, Channels, and Bands?

Chapter 7 BAR CHART PATTERNS

CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. What Is a Pattern?
2. Do Patterns Exist?
3. Computers and Pattern Recognition
4. Market Structure and Pattern Recognition
5. Bar Charts and Patterns
6. How Profitable Are Patterns?
7. Classic Bar Chart Patterns
8. Patterns with Rounded Edges—Rounding and Head-and-Shoulders

Chapter 8 SHORT-TERM PATTERNS

CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. Pattern Construction and Determination

2. Traditional Short-Term Patterns
3. Summary of Short-Term Patterns
4. Candlestick Patterns

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 Chapter 9 CONFIRMATION
CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. Analysis Methods
2. Volume Confirmation
3. Open Interest
4. Price Confirmation

Chapter 10 CANDLESTICK CHARTING ESSENTIALS

STEVE NISON

1. Candlestick Overview: Origins and Basic Applications

2. Candlestick Construction
3. Basic Market Strategies

Chapter 11 POINT-AND-FIGURE CHARTING

PERRY J. KAUFMAN

Chapter 12 INTRODUCTION TO THE WAVE PRINCIPLE

WAYNE GORMAN, JEFFREY KENNEDY, AND ROBERT R. PRECHTER, JR.

1. Motive Waves
2. Corrective Waves
3. Fibonacci Relationships

Chapter 13 THE ANATOMY OF ELLIOTT WAVE TRADING

WAYNE GORMAN, JEFFREY KENNEDY, AND ROBERT R. PRECHTER, JR.

1. How the Wave Principle Improves Trading

2. The Four Best Waves to Trade
3. Elliott Wave Trade Setups
4. When to Trade Corrections
5. Guidelines for Trading Specific Elliott Wave Patterns
6. The Neglected Essentials— Risk Management and the Psychology of Trading
7. The Psychology of Trading

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 SECTION II
MARKETS

Chapter 14 OVERVIEW (OF FINANCIAL MARKETS)

DAVID WILSON

Chapter 15 GOVERNMENT (OF FINANCIAL MARKETS)

DAVID WILSON

1. Currencies
2. Bills
3. Notes and Bonds

Chapter 16 COMPANIES
DAVID WILSON

1. Money Markets
2. Notes and Bonds
3. Stocks

Chapter 17 HARD ASSETS

DAVID WILSON

1. Gold
2. Commodities
3. Real Estate

Chapter 18 INDEXES
DAVID WILSON

1. Currency
2. Debt
3. Equity
4. Hard Assets

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 Chapter 19 MEASURING MARKET STRENGTH
CHARLES D. KIRKPATRICK II AND JULIE R. DAHLQUIST

1. Market Breadth
2. Up and Down Volume Indicators
3. Net New Highs and Net New Lows
4. Using Moving Averages
5. Very Short-Term Indicators

Chapter 20 WHAT IS THE EFFICIENT MARKET HYPOTHESIS?

EDWIN T. BURTON AND SUNIT N. SHAH

1. Information and the Efficient Market Hypothesis

2. Random Walk, the Martingale Hypothesis, and the EMH
3. False Evidence against the EMH
4. What Does It Mean to Disagree with the EMH?

Chapter 21 THE EMH AND THE “MARKET MODEL”

EDWIN T. BURTON AND SUNIT N. SHAH

1. Risk and Return—the Simplest View

2. The Capital Asset Pricing Model (CAPM)
3. What Is the Market Model?

Chapter 22 THE FORERUNNERS TO BEHAVIORAL FINANCE

EDWIN T. BURTON AND SUNIT N. SHAH

1. The Folklore of Wall Street Traders

2. The Birth of Value Investing: Graham and Dodd
3. Financial News in a World of Ubiquitous Television and Internet

Chapter 23 NOISE TRADERS AND THE LAW OF ONE PRICE

EDWIN T. BURTON AND SUNIT N. SHAH

1. The Law of One Price and the Case of Fungibility

2. Noise

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 Chapter 24 NOISE TRADERS AS TECHNICAL TRADERS
EDWIN T. BURTON AND SUNIT N. SHAH

1. Technical Traders as Noise Traders

2. Herd Instinct Models

Chapter 25 OPTION PRICING BASICS

EDWIN J. ELTON, MARTIN J. GRUBER, STEPHEN J. BROWN, AND WILLIAM N. GOETZMANN

1. Types of Options

SECTION III
STATISTICAL ANALYSIS AND SYSTEM DEVELOPMENT

Chapter 26 OBJECTIVE RULES AND THEIR EVALUATION

DAVID ARONSON

1. The Great Divide: Objective versus Subjective Technical Analysis

2. TA Rules
3. Traditional Rules and Inverse Rules
4. The Use of Benchmarks in Rule Evaluation
5. Other Details: The Look-Ahead Bias and Trading Costs

Chapter 27 BASIC CONCEPTS AND CALCULATIONS

PERRY J. KAUFMAN

1. About Data and Averaging

2. On Average
3. Price Distribution

Chapter 28 ACADEMIC APPROACHES TO TECHNICAL ANALYSIS

ANDREW W. LO AND JASMINA HASANHODZIC

1. Theoretical Underpinnings
2. Empirical Evaluation
3. Adaptive Markets and Technical Analysis

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 Chapter 29 UNDERSTANDING IMPLIED VOLATILITY
RUSSELL RHOADS

1. Historical Versus Forward-Looking Volatility

2. Put-Call Parity
3. Estimating Price Movement
4. Valuing Options: Pricing Calculators and Other Tools
5. Fluctuations Based on Supply and Demand
6. The Impact on Option Prices
7. Implied Volatility and the VIX

Chapter 30 ABOUT THE VIX INDEX

RUSSELL RHOADS

1. History of the VIX

2. Calculating the VIX
3. The VIX and Put-Call Parity
4. The VIX and Market Movement
5. Equity Market Volatility Indexes
6. Amex QQQ Volatility Index

SECTION IV
INTRODUCTION TO THE TOOLS FOR BUILDING TECHNICAL INVESTING STRATEGIES

Chapter 31 BEING RIGHT OR MAKING MONEY

NED DAVIS

1. Bad News about Forecasting (Being Right)

2. Good News about Making Money
3. Being Right and Other Investment Techniques Are Overrated and Are Not the Keys to Success
4. The Four Real Keys to Making Money
5. The Battle for Investment Survival and Handling Mistakes
6. Stories of Five Successful Winners
7. Making Our Own Reality
8. The Ned Davis Research Response to All This
9. Timing Models
10. What Is Contrary Opinion and How to Use It
11. History and Risk Management

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 Chapter 32 THE MODEL–BUILDING PROCESS
NED DAVIS

1. The Model-Building Process

2. Where to Start: Model Inputs
3. Sentiment and Valuation Indicators
4. Monetary Indicators
5. Economic Indicators
6. Internal Indicators
7. Moving Averages
8. Crossings and Slopes
9. Momentum
10. Putting Indicators Together

Chapter 33 SEASONALITY AND CALENDAR PATTERNS

PERRY J. KAUFMAN

1. A Consistent Factor
2. The Seasonal Pattern
3. Cycle Analysis
4. Cycle Basics

Chapter 34 CONSENSUS AND COMMITMENT INDICATORS

DR. ALEXANDER ELDER

1. Tracking Advisory Opinion

2. Signals from the Press
3. Signals from Advertisers
4. Commitments of Futures Traders
5. Legal Insider Trading
6. Short Interest

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 Chapter 35 RELATIVE STRENGTH AS A CRITERION FOR INVESTMENT SELECTION
ROBERT A. LEVY

1. Construction of the Data File

2. Relative Strength Continuation: Empirical Results
3. The Effect of Stock Price Volatility
4. Market Ranks: A First Attempt at Timing
5. Divergence Ranks: A Second Attempt at Timing
6. Limitations

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CMT Level I 2018 Table of Contents
© 2018 CMT Association, Inc.