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Volume 12 Issue 3
The new custom curriculum offered by Wiley Publishing is now available for purchase. It has been a long process to
identify and create these new books, but the work and wait has paid off. For the current administration’s test dates,
October 15‐17, 2015, the curriculum can now be accessed online as these books are available only through the
VitalSource platform, the books can also be printed out, a chapter at a time, on any regular printer. For more
information and to purchase the books, click here: http://www.wiley.com/go/cmt
Level I – Table of Contents
Chapter 1 Introduction to the Evolution of Technical Analysis
Chapter 2 A New Age for Technical Analysis
Chapter 3 Technical Analysis Today
Chapter 4 Brief History of Randomness & Efficient Markets
Chapter 5 Academic Approaches to Technical Analysis
Chapter 6 The New High–New Low Index
Chapter 7 Stocks above 50-Day MA
Chapter 8 Other Stock Market Indicators
Chapter 9 Consensus and Commitment Indicators
Chapter 10 Basic Candlestick Charting
Chapter 11-15 Basic Indicators Reference
Chapter 16 (Markets) Overview
Chapter 17 Government
Chapter 18 Companies
Chapter 19 Hard Assets
Chapter 20 Indexes
Chapter 21 Technical Analysis as a Science
Chapter 22 Objective Rules and Their Evaluation
Chapter 23 Point-and-Figure Charting
Chapter 24 What Is Price?
Chapter 25 What Is the Market?
Chapter 26 The Trading Scene
Chapter 27 The Market Crowd and You
Chapter 28 Psychology of Trends
Chapter 29 Managing versus Forecasting
Chapter 30 Charting
Chapter 31 Support and Resistance
Chapter 32 Trends and Trading Ranges
Chapter 33 Introduction to the Wave Principle
Chapter 34 The Anatomy of Elliott Wave Trading
Chapter 35 What Is the Efficient Market Hypothesis?
Chapter 36 The EMH and the “Market Model”
Chapter 37 The Forerunners to Behavioral Finance
Chapter 38 Noise Traders and the Law of One Price
Chapter 39 Noise Traders as Technical Traders
Chapter 40 Being Right or Making Money
Chapter 41 The Model‐Building Process
Chapter 42 Understanding Chart Patterns
Chapter 43 Understanding Chart Pattern Breaks
Chapter 44 Triangles, Pennants, and Flags
Chapter 45 Tops and Bottoms
Chapter 46 Head-and-Shoulders Patterns
Chapter 47 Understanding Implied Volatility
Chapter 48 About the VIX Index
Chapter 49 Basic Concepts and Calculations
Chapter 50 Seasonality and Calendar Patterns
Chapter 51 Relative Strength as a Criterion for
Investment Selection
The New Curriculum Has Arrived!
Level II – Table of Contents
Chapter 1 Understanding Implied Volatility
Chapter 2 About the VIX Index
Chapter 3 Intermarket Analysis
Chapter 4 Correlation
Chapter 5 Perspectives on Active and Passive
Money Management
Chapter 6 Understanding Chart Patterns
Chapter 7 Understanding Chart Pattern Breaks
Chapter 8 Triangles, Pennants, and Flags
Chapter 9 Tops and Bottoms
Chapter 10 Head-and-Shoulders Patterns
Chapter 11 Computers in Trading
Chapter 12 Moving Averages
Chapter 13 Moving Average Convergence-Divergence:
MACD Lines and MACD-Histogram
Chapter 14 The Directional System
Chapter 15 Oscillators
Chapter 16 Stochastic
Chapter 17 Relative Strength Index
Chapter 18 Volume
Chapter 19 Volume-Based Indicators
Chapter 20 Open Interest
Chapter 21 Time
Chapter 22 Trading Timeframes
Chapter 23 The New High– New Low Index
Chapter 24 Stocks above 50-Day MA
Chapter 25 Other Stock Market Indicators
Chapter 26 Consensus and Commitment Indicators
Chapter 27 Regression Analysis
Chapter 28 Time-Based Trend Calculations
Chapter 29 T rend Systems
Chapter 30 Momentum and Oscillators
Chapter 31 Seasonality and Calendar Patterns
Chapter 32 Cycle Analysis
Chapter 33 Volume, Open Interest, and Breadth
Chapter 34 The Scientific Method and Technical Analysis
Chapter 35 Theories of Nonrandom Price Motion
Chapter 36 Case Study of Rule Data Mining for the S&P 500
Chapter 37 Prospect Theory
Chapter 38 Perception Biases
Chapter 39 Inertial Effects
Chapter 40 Relative Strength Strategies for Investing
Chapter 41 Risk Control
Level III –Table of Contents
Chapter 1 Triple Screen Trading System
Chapter 2 Spreads and Arbitrage
Chapter 3 Behavioral Techniques
Chapter 4 Pattern Recognition
Chapter 5 Day Trading
Chapter 6 Adaptive Techniques
Chapter 7 Price Distribution Systems
Chapter 8 Multiple Time Frames
Chapter 9 Advanced Techniques
Chapter 10 System Testing
Chapter 11 Practical Considerations
Chapter 12 Risk Control
Chapter 13 Regression
Chapter 14 International Indices and Commodities
Chapter 15 The S&P 500
Chapter 16 European Indices
Chapter 17 Gold
Chapter 18 Intraday Correlations
Chapter 19 Intermarket Indicators
Chapter 20 Everything Is Relative Strength Is Everything
Chapter 21 Analyzing the Macro-Finance Environment
Chapter 22 Portfolio Risk and Performance Attribution
Chapter 23 Hypothesis Tests and Confidence Intervals
Chapter 24 Data-Mining Bias
Chapter 25 Causality and Statistics
Chapter 26 Illusions
Chapter 27 The Story Is the Thing
Chapter 28 Are Two Heads Better Than One?
Chapter 29 The Anatomy of a Bubble
Chapter 30 De-Bubbling: Alpha Generation
Chapter 31 The VIX as a Stock Market Indicator
Chapter 32 Hedging with VIX Derivatives
Chapter 33 Introduction to Candlestick Charts
Chapter 34 Findings
Chapter 35 Statistics Summary
Chapter 36 Above the Stomach
Chapter 37 Deliberation
Chapter 38 Doji Star, Bearish
Chapter 39 Engulfing, Bearish
Chapter 40 Engulfing, Bullish
Chapter 41 Last Engulfing Bottom
Chapter 42 Last Engulfing Top
Chapter 43 Three Outside Down
Chapter 44 Three Outside Up
Chapter 45 Two Black Gapping Candles
Chapter 46 Window, Falling
Chapter 47 Window, Rising
Chapter 48 Dead-Cat Bounce
Chapter 49 Dead-Cat Bounce, Inverted
Chapter 50 Earnings Surprise, Bad
Chapter 51 Earnings Surprise, Good
Chapter 52 FDA Drug Approvals
Chapter 53 Flag, Earnings
Chapter 54 Same-Store Sales, Bad
Chapter 55 Same-Store Sales, Good
Chapter 56 Stock Downgrades
Chapter 57 Stock Upgrades
Chapter 58 Statistics Summary
Chapter 59 Fact, Fiction, and Momentum Investing
The Level III exam is given on Thursday, October 15. As usual scheduling at Prometric is based on a first‐come, first‐
served basis, so it is helpful to sign up early, especially for Level III. If you need assistance with registering for the exam
or scheduling at Prometric, please contact Marie Penza at [email protected].
Now is the time to begin your study if you haven’t already. There is still plenty of time to complete your studies before
the October exam. Consider the following estimates based on reading at a speed of two hundred words per minute
(considered an average reading speed) which will translate into two minutes and twenty seconds per page for those
pages in these texts that are full text without graphics. These estimates do not include the front matter pages nor
reference pages, so the curriculum size is slighty smaller than the actual page count.
Exam
Curriculum size
Reading hours for full pages
Estimated Actual time
Level I
~700 pages
28 hours
20 hours
Level II
~ 850 pages
34 hours
27 hours
Level III
~ 1200 pages
47 hours
36 hours
Multiplying the number of pages by a certain number of minutes per page may not be the most accurate forecast for
how much time it will take you to read through the material. For some people that might be what is required, but most
will find that they can do this in less time. Here are three reasons why:
1. Not all pages are exclusively full of text.
Many pages feature graphics or tables
that are meant for reference and won’t
require as much time to study.
2. The book is meant to be used for
reference study, not so much for cover
to cover reading.
The selected readings are from a variety
of texts. Each reading is chosen to
address the knowledge and skill
requirements identified in the recent
Job Analysis and described by the
learning objectives. As such you may
not need to read the entire chapter or
even the entire book before gaining the
comprehension you need to fulfill a
given learning objective.
3. Many ideas in the book are not new to experienced candidates.
If you have been working with technical analysis, there is a chance that you have read some of these books before,
or perhaps you’ve learned some of what is in them already. We believe that some will find they are able to cover the
reading material in about half the time estimated for full text pages. Based on this rationale, and the fact that some
people read faster than others, we have provided a revised estimate for what we expect the average candidate will
find their reading time to be. Your experience may vary.
The test dates for 2015 are October 15‐17.
Time to start studying in earnest!
Don’t miss the upcoming educational webinars presented by Gordon Scott, CMT, Managing Director of the CMT
Program. Gordon will present on the new CMT curriculum. The webinars will be held at 12:00PM ET on August 11th, 12th
and 13th. If you are unable to attend the live presentation, they will be recorded and you can watch them at your
convenience. These presentations will give you a look at the curriculum and its platform. If you have yet to purchase the
books, you’ll be able to see them on their platform and get a look at the material before you acquire them.
The presentations are currently featured on the front page of the mta.org homepage, titled as “CMT Level [1, 2,3]
Overview”, and will answer the following questions:
Why did the CMT program need a new curriculum?
How were the current readings selected for the new curriculum?
Why did the process lead to delays for the curriculum?
Is the current curriculum really any better than the old?
Is the current curriculum larger than the old reading list?
How long will it take me to study for the exams based on the new curriculum?
Does the new curriculum come with sample exams?
How do I use the new learning objectives to study effectively for the exams?
How can I find enough study time before the test date to actually have a chance to pass the exam?
Will the exams be significantly harder to pass?
What areas can I skip in my study?
Can I print out this curriculum?
What things should I be looking for within this new curriculum?
Will this new curriculum just help me pass an exam or will it teach me something useful?
Are there any tips or techniques I can use to improve my study?
This presentation will be the place for you to get your questions answered about the new curriculum—especially
questions you haven’t heard asked or answered before. If you cannot attend the presentation while it is being delivered
live, you can email your questions in ahead of time. Email all questions to Gordon Scott ([email protected]).
Be sure to register for these presentations right away.
CMT Level I Overview, CMT Level II Overview, CMT Level III Overview
Upcoming Curriculum Webinars
The MTA recently licensed the CFA Institute Standards of Practice Handbook. This license allows MTA members to
access the detailed standards developed by the CFA Institute over many years. The Handbook could serve as a guide to
best practices for finance professionals.
As an example, under the Standards of Professional Conduct, members owe certain duties to clients. These duties
include: Loyalty, Prudence, and care; Fair dealing; Suitability; Fair accurate, and Complete performance presentation;
and Preservation of confidentiality. The Standards of Practice Handbook provides additional details on the meaning of
these duties, case studies to assist in understanding and studying the standards and examples that clarify how to
implement the standards on the job. Members also owe certain duties to employers.
These duties include:
Loyalty
Disclosure of additional compensation arrangements and the avoidance of a conflict of interest under
any additional compensation agreement
A responsibility to make reasonable efforts to detect and prevent violations of laws, regulations and
ethical standards by anyone under their supervision.
These responsibilities to clients and employers are independent of each other but they can also be related to each other.
Expanding on the duty to preserve client confidentiality, the Handbook explains members must keep information about
current, former, and prospective clients confidential unless:
(1) The information concerns illegal activities on the part of the client
(2) Disclosure is required by law
(3) The client or prospective client permits disclosure of the information
Even well‐intentioned disclosures would violate the standard. For example, a member might be an investment adviser
who receives a call from a client saying his accountant recommends making a $50,000 charitable donation to reduce
income taxes. The client is seeking help identifying securities that could be sold to maximize the tax benefit. Now,
suppose the adviser is on the board of directors of a nonprofit organization working to reduce homelessness in her local
community. She knows the nonprofit organization could benefit from a gift of $50,000 and considers calling the
The New Ethics Questions: Adopting the CFA Standards
organization’s development director with a suggestion to solicit a gift from her client. That would be a violation of the
Standards of Professional Conduct because the member would be revealing confidential client information. There is no
exception to the Standard for charitable causes.
Members also need to respect client confidentiality when switching jobs. Remember that members owe a duty of loyalty
to their employers. Consider the case of a member who is leaving one firm to pursue a similar opportunity at another
firm. Before leaving her current position, the member cannot solicit clients to become customers of her new firm. She
cannot solicit prospective customers either because that would violate the Standard requiring her to act with loyalty to
her employer’s interests.
Soliciting current and prospective clients prior to leaving a position for a new one is unethical and a violation of the
Standards. But, what about after you start that new job? Is it ethical to contact former clients that you know well to
request they become customers of your new firm? Client records are the property of the firm. Contacting former clients
through client lists or other information taken from a former employer would be a violation of the standard requiring
loyalty to your employer. However, it is possible under some conditions to solicit former clients without violating the
Standards of Professional Conduct.
The Standards of Practice Handbook explains: Simple knowledge of the names and existence of former clients is not
confidential information, just as skills or experience that an employee obtains while employed are not “confidential” or
“privileged” information. The Code and Standards do not impose a prohibition on the use of experience or knowledge
gained at one employer from being used at another employer. The Code and Standards also do not prohibit former
employees from contacting clients of their previous firm, in the absence of a non‐competition agreement. Members and
candidates are free to use public information about their former firm after departing to contact former clients without
violating Standard IV(A), Duties to Employers: Loyalty.
The bottom line is, in the absence of a non‐competition agreement, as long as the member maintains her duty to loyalty
to her former employer, does not take steps to solicit clients prior to leaving her former employer, and does not make
use of material from the former employer without its permission after leaving there is no violation of the Code and
Standards. This example illustrates how ethics are a practical problem for members to consider. The example also
illustrates the value of the resources provided under the recent licensing agreement.
You can download a copy of the latest edition of the Standards of Practice Handbook by clicking here.
Michael, Carr, CMT. "The New Ethics Questions Adopting the CFA Standards."
Technically Speaking July 2015
The new ethics guidelines may give candidates a case of nervousness regarding the new standards information—they
may fear it is a whole new area they must study and that there are lots of readings necessary to master the new
Standards and Practices information. For those who worry, listening to a few minutes of Michael Carr, CMT, speak about
the new standards will put your mind at rest. “The exam questions will not require any more than a common‐sense
understanding of the basic text in the CFA Standards and Practices Handbook,” Mike recently explained in his webinar on
the subject.
In this presentation, Mike explains why this change was needed. Ironically it seems that the MTA members were victims
of their own success. Mike points out that because of the MTA membership's high standards of behavior, one weakness
of the program has been a lack of case studies. This was one reason the MTA recently licensed the CFA Institute's Code
of Ethics and Standards of Professional Conduct.
Mike was part of the ethics committee that extensively researched and reviewed the CFA standards. They came to the
conclusion that it would of great benefit for our association to adopt these standards. Among other reasons, it was clear
that the standards were much more thoroughly reviewed and vetted by a large number of people, and continually
updated based on recent legal decisions. Mike explained this and many other important details in his message on the
recent video discussion.
Click here to view his recent webinar presentation:
http://media.mta.org/videos/2015/cmt/ethics/ethics.html
Ethics Video Resource: Michael Carr, CMT
Level I and II sample Ethics questions:
In addition to the previous style of ethics questions, many of which are still applicable under the new standards,
questions may feature more scenario‐specific information. These scenarios are likely to be related to obvious trouble
spots known to generate queries from financial practitioners. Consider the following examples.
Level I Practice Question
David Johnson, a senior analyst with a brokerage firm, decides to change his recommendation for the common stock of
Pigeon Industries, Inc. from a “buy” to a “sell”. This change in investment advice is mailed to all the firm’s clients on
Wednesday. Next day, a client calls in with a buy order for 500 shares of Pigeon Industries, Inc. In this circumstance,
Johnson should:
A. Accept the order.
B. Advise the customer of the change in recommendation after accepting the order.
C. Advise the customer of the change in recommendation before accepting the order.
D. Not accept the order because it is contrary to the firm’s recommendation.
Answer for Level I Practice Question:
Correct answer: C
Advise the customer of the change in recommendation before accepting the order.
This question involves Standard III (B) – Fair Dealing.
Reference: Code of Ethics and Standards of Professional Conduct
Level II Practice Question
The mosaic theory holds that an analyst:
A. Violates the Code and Standards if the analyst fails to have knowledge of and comply with the applicable laws.
B. Can use material public information and nonmaterial nonpublic information in the analyst’s analysis.
C. Should use all available and relevant information in support of an investment recommendation.
D. Can use material and nonmaterial nonpublic information in the analyst’s analysis.
Level I and II Exam Focus: Ethics Questions
Answer for Level II Practice Question:
Correct answer: B
Can use material public information and nonmaterial nonpublic information in the analyst’s analysis.
This question involves Standard II (A) – Material Nonpublic Information.
Reference: Code of Ethics and Standards of Professional Conduct
Level III Practice Question
Alyssa Newmark, CMT is an investment advisor and technical analyst for high‐net‐worth clients. A client with an
aggressive risk profile in his investment policy statement asks about investing in the Top Shelf hedge fund. This fund,
based in Greenwich, Connecticut, has reported 20% returns for the first three years. The fund prospectus states that its
strategy involves long and short positions in the energy sector using extensive leverage with options. Based on her
overall fusion analysis using a fundamental and technical examination of the fund’s financial holdings, track record, the
principals involved in managing the fund, the fees charged, and the fund’s risk profile, Newmark recommends the fund
to the client and secures a position in it. The next week, the fund announces that it has suffered a loss of 65% of its
value and is suspending operations and redemptions until after a regulatory review. Newmark’s client calls him in a
panic and asks for an explanation.
Given this information, which of the following statements is most correct? (2 points)
A. Newmark’s actions were consistent with Standard V(A) as her analysis of an investment that results in a
reasonable basis for her recommendation does not guarantee that the investment has no downside risk.
B. Newmark’s actions were not legitimate has her analysis of this investment is unfavorably biased due to a
lack of fundamental and technical analysis.
C. Newmark’s actions were legitimate as she did not have to discuss the matter with her client as there was
limited risk with this investment.
D. Newmark’s actions were inconsistent with Standard V(A).
Answer for Level III Practice Question:
Correct answer: A
Newmark’s actions were consistent with Standard V(A). Analysis of an investment that results in a reasonable basis for
recommendation does not guarantee that the investment has no downside risk.
Comment: Newmark should discuss the analysis process with the client while reminding him or her that past
performance does not lead to guaranteed future gains and that losses in an aggressive investment portfolio should be
expected. (e.g. Successful Due Diligence/Failed Investment).
Are you looking for serious help to prepare for the CMT Level I exam?
Click here for details: http://cmt‐exam.nyif.com/
When you register for the CMT Level I Exam you are embarking on a journey to receive one of the world's most
prestigious investment certifications, from the organization that pioneered the discipline of Technical Analysis. To make
sure you pass the exam, The New York Institute of Finance is offering a one‐of‐a‐kind Online Prep Program. When it
comes to studying for the CMT Exam, it's not just about studying hard, but studying smart. Enroll in the NYIF Prep
Program, and we'll make sure you do both! Click here for more information.
EDUCATIONAL WEBINAR SERIES FROM THE ARCHIVES
The MTA’s popular Educational Webinar Series conducted last year has presentations which may help you in your study
for the exams. Several of them are still relevant despite the curriculum change, and more recent webinars have also
focused on topics new to the exam. The recordings of these webinars are located in the on‐demand archives.
These videos are helpful because they will focus your attention on the application of the topic at hand. This will give you
an idea of the kind of issues embedded in the questions of the exam. While these presenters are not talking specifically
about exam questions, they are demonstrating the application of the principles you are reading about. This is
particularly useful insight for level II and level III style questions.
Here is a list of specific links for these presentations:
Trend and Reversion Indicators – Will Geisdorf, CMT
Market Risk – Cynthia Case, CMT
Quantitative, Statistical Analysis – Merav Ovair, CQM
Behavioral Finance – Larry Berman, CMT
Risk Management – Charlie Kirkpatrick, CMT
Price Patterns – Charles Basseti, CMT
Technical Analysis Basics – Martin Pring, CMT
Volume, Open Interest and Breadth – Perry Kaufmann, CMT
Point‐and‐Figure Charting (Levels I and II) – Jeremy DuPlessis, CMT, FSTA
Elliott Wave (Levels I and II) – Wayne Gorman, CMT
Asset Allocation (Levels II and III) – Mebane Faber, CMT
Cycles – Connie Brown, CMT
Selection and Decision using RRGs (Level III) – Matthew Verdouw, CMT
Video Resources
