| ? |
Answer |
Yea or
Nay |
Question: |
Correct Answer: |
| 1 |
YES |
| Question 1 - Each stock will have which of the following charts associated with it:
Answer Yes or No
Price Chart
|
Yes - Every stock will have a Price Chart associated with it. This provides with a picture of supply and demand in the stock.
|
| 2 |
YES |
| Question 2 - Each stock will have which of the following charts associated with it:
Answer Yes or No
Relative Strength Chart vs. Market
|
Yes - For each stock we want to be able to measure how it is performing versus the broad market and for that we look to its market relative strength chart.
|
| 3 |
NO |
| Question 3 - Each stock will have which of the following charts associated with it:
Answer Yes or No
Relative Strength Chart vs. Bonds
|
No - As a general rule, stocks are not compared to bonds but if you had a particular instance that you wanted to compare something to a bond, you could do that using the DWA charting system.
|
| 4 |
NO |
| Question 4 - Each stock will have which of the following charts associated with it:
Answer Yes or No
Relative Strength vs. Commodities
|
No - As a general rule, stocks don't traditionally have a relative strength chart versus commodities but again this could be created if you were trying to determine something specific.
|
| 5 |
YES |
| Question 3 - Each stock will have which of the following charts associated with it:
Answer Yes or No
Relative Strength Chart vs. Peer Group
|
Yes - As a part of its default chart series, every stock will be compared to its peer group on a relative strength chart.
|
| 6 |
NO |
| Answer True or False to each of the
following statements about relative strength.
Mutual funds do not have peer relative strength charts.
|
No - Mutual Funds do in fact have peer relative strength charts to compare how they are doing versus a baseline index that particular asset class.
|
| 7 |
YES |
| Answer True or False to each of the
following statements about relative strength.
Peer Relative Strength strives to determine how a stock is performing versus others in its group.
|
Yes - Peer Relative Strength is a measure of how the stock is doing versus others in the group; or said another way, it is a way of determining best in class.
|
| 8 |
NO |
| Answer True or False to each of the
following statements about relative strength.
Relative Strength charts are designed to be short term in nature.
|
No - Signals on relative strength charts typically last 18 to 24 months so we would classify this indicator as being longer term in nature.
|
| 9 |
YES |
| Answer True or False to each of the
following statements about relative strength.
In Sector Relative Strength charts, the column is the most important.
|
Yes - Because the DWA Sectors are baskets of stocks, they tend to move slower than individual names. Therefore, when we evaluate these charts, we pay particular attention ot the column of the relative strength chart.
|
| 10 |
YES |
| Answer True or False to each of the
following statements about relative strength.
In ETF Relative Strength charts, the column is the most important.
|
Yes - Because the ETFs are baskets of stocks, they tend to move slower than individual names. Therefore, when we evaluate these charts, we pay particular attention ot the column of the relative strength chart.
|
| 11 |
NO |
| Answer True or False to each of the
following statements about relative strength.
Relative Strength charts tell us whether the stock price will move higher or lower.
|
No - Relative Strength is just that -- a measure of relative performance. If the market is down 20% and our stock has positive relative strength and only went down 10%, the RS chart was correct because it suggestsed that our stock would hold up better in an individual market decline but that doesn't make the stock immune from falling in price.
|
| 12 |
YES |
| Answer True or False to each of the
following statements about relative strength.
Relative Strength charts are updated daily.
|
Yes - just about all of the charting work done by Dorsey, Wright & Associates is updated daiy and quite a few areas are even updated intraday.
|
| 13 |
YES |
| Answer True or False to each of the
following statements about relative strength.
A market relative strength chart tells us how the S&P Equal Weighted index is performing versus the security in question.
|
Yes - The base line index when creating a market relative strength chart for a stock is to use the S&P 500 Equal Weighted Index. Therefore, the market relative strength chart tells us how the stock is performing versus the SPXEWI index.
|
| 14 |
1 |
| Peer Relative Strength is determined by dividing which of the following indices?
|
DWA Sector - Dorsey, Wright has created equal weighted indices for 40 different groups. The DWA Sector chart is used as the comparison for each stock's peer relative strength calculation and chart.
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| 15 |
3 |
| Order the following relative strength conditions from Strongest to Weakest. Enter 1 for the strongest to 4 for the
weakest.
|
Sell Signal and Column of X's - This is the third weakest of all relative strength readings. The only weaker reading is that of a sell signal and in a column of O's.
|
| 16 |
1 |
| Order the following relative strength conditions from Strongest to Weakest. Enter 1 for the strongest to 4 for the
weakest.
|
Buy Signal and Column of X's - This is the strongest of all relative strength charts as the relative strength chart is positive longer term (Buy) and positive nearer term (X's)
|
| 17 |
2 |
| Order the following relative strength conditions from Strongest to Weakest. Enter 1 for the strongest to 4 for the
weakest.
|
Buy Signal and Column of O's - This relative strength chart would be the second strongest, just under a buy signal and in X's. The buy signal and in O's tells us the RS chart is positive longer term but on a near term basis, expect a breather or pullback.
|
| 18 |
4 |
| Order the following relative strength conditions from Strongest to Weakest. Enter 1 for the strongest to 4 for the
weakest.
|
Sell Signal and Column of O's - This is the weakest of all relative strength charts as it tells us that the stock is likely to underperform on both a long term and near term basis.
|
| 19 |
3 |
| Match the appropriate strategy / comment with the most suitable relative strength situation.
Move some assets from equities to fixed income
|
Strategy 3 - Fixed income funds are giving relative strength buy signals. When fixed income funds are giving buy signals versus equities, we would want to bump up our fixed income exposure.
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| 20 |
4 |
| Match the appropriate strategy / comment with the most suitable relative strength situation.
Expect a breather in an otherwise overall uptrend.
|
Strategy 4 - When the overall trend of a stock is positive and the relative strength chart reverses into a column of O's that would not suggest a change in direction but rather just a pullback or consolidation in an otherwise overall uptrend.
|
| 21 |
2 |
| Match the appropriate strategy / comment with the most suitable relative strength situation.
Sell stock and consider others in the group.
|
Strategy 2 - When a stock's peer relative strength chart gives a sell signal that suggests that the stock should begin to underperform others in the group and stocks with positive peer relative strength should be considered as a replacement.
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| 22 |
1 |
| Match the appropriate strategy / comment with the most suitable relative strength situation.
Add exposure to the sector or overweight the sector in the portfolio.
|
Strategy 1 - When a sector relative strength chart moves into a column of X's that suggests that group has a higher than average probablility of outperforming the market and an appropriate strategy would be to make sure that you have exposure to the sector or overweight that sector.
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