Chartered Technical
Chartered Technical
Issue 3
ThenewcustomcurriculumofferedbyWileyPublishingisnowavailableforpurchase.Ithasbeenalongprocessto
identifyandcreatethesenewbooks,buttheworkandwaithaspaidoff.Forthecurrentadministrationstestdates,
October1517,2015,thecurriculumcannowbeaccessedonlineasthesebooksareavailableonlythroughthe
VitalSourceplatform,thebookscanalsobeprintedout,achapteratatime,onanyregularprinter.Formore
informationandtopurchasethebooks,clickhere:http://www.wiley.com/go/cmt
LevelITableofContents
Chapter 1 Introduction to the Evolution of Technical Analysis
Chapter 30 Charting
Chapter 17 Government
Chapter 18 Companies
Chapter 20 Indexes
Investment Selection
LevelIITableofContents
Chapter 1 Understanding Implied Volatility
Chapter 21 Time
Chapter 4 Correlation
Money Management
Chapter 36 Case Study of Rule Data Mining for the S&P 500
Chapter 15 Oscillators
Chapter 16 Stochastic
Chapter 18 Volume
LevelIIITableofContents
Chapter 1 Triple Screen Trading System
Chapter 17 Gold
Chapter 13 Regression
Chapter 26 Illusions
Chapter 34 Findings
Chapter 37 Deliberation
TheLevelIIIexamisgivenonThursday,October15.AsusualschedulingatPrometricisbasedonafirstcome,first
servedbasis,soitishelpfultosignupearly,especiallyforLevelIII.Ifyouneedassistancewithregisteringfortheexam
orschedulingatPrometric,[email protected].
Nowisthetimetobeginyourstudyifyouhaventalready.Thereisstillplentyoftimetocompleteyourstudiesbefore
theOctoberexam.Considerthefollowingestimatesbasedonreadingataspeedoftwohundredwordsperminute
(consideredanaveragereadingspeed)whichwilltranslateintotwominutesandtwentysecondsperpageforthose
pagesinthesetextsthatarefulltextwithoutgraphics.Theseestimatesdonotincludethefrontmatterpagesnor
referencepages,sothecurriculumsizeisslightysmallerthantheactualpagecount.
Exam
Curriculumsize
Readinghoursforfullpages
EstimatedActualtime
LevelI
~700pages
28hours
20hours
LevelII
~850pages
34hours
27hours
LevelIII
~1200pages
47hours
36hours
Multiplyingthenumberofpagesbyacertainnumberofminutesperpagemaynotbethemostaccurateforecastfor
howmuchtimeitwilltakeyoutoreadthroughthematerial.Forsomepeoplethatmightbewhatisrequired,butmost
willfindthattheycandothisinlesstime.Herearethreereasonswhy:
1. Notallpagesareexclusivelyfulloftext.
Thetestdatesfor2015areOctober1517.
Timetostartstudyinginearnest!
Manypagesfeaturegraphicsortables
thataremeantforreferenceandwont
requireasmuchtimetostudy.
2. Thebookismeanttobeusedfor
referencestudy,notsomuchforcover
tocoverreading.
Theselectedreadingsarefromavariety
oftexts.Eachreadingischosento
addresstheknowledgeandskill
requirementsidentifiedintherecent
JobAnalysisanddescribedbythe
learningobjectives.Assuchyoumay
notneedtoreadtheentirechapteror
eventheentirebookbeforegainingthe
comprehensionyouneedtofulfilla
givenlearningobjective.
3. Manyideasinthebookarenotnewtoexperiencedcandidates.
Ifyouhavebeenworkingwithtechnicalanalysis,thereisachancethatyouhavereadsomeofthesebooksbefore,
orperhapsyouvelearnedsomeofwhatisinthemalready.Webelievethatsomewillfindtheyareabletocoverthe
readingmaterialinabouthalfthetimeestimatedforfulltextpages.Basedonthisrationale,andthefactthatsome
peoplereadfasterthanothers,wehaveprovidedarevisedestimateforwhatweexpecttheaveragecandidatewill
findtheirreadingtimetobe.Yourexperiencemayvary.
DontmisstheupcomingeducationalwebinarspresentedbyGordonScott,CMT,ManagingDirectoroftheCMT
Program.GordonwillpresentonthenewCMTcurriculum.Thewebinarswillbeheldat12:00PMETonAugust11th,12th
and13th.Ifyouareunabletoattendthelivepresentation,theywillberecordedandyoucanwatchthematyour
convenience.Thesepresentationswillgiveyoualookatthecurriculumanditsplatform.Ifyouhaveyettopurchasethe
books,youllbeabletoseethemontheirplatformandgetalookatthematerialbeforeyouacquirethem.
Thepresentationsarecurrentlyfeaturedonthefrontpageofthemta.orghomepage,titledasCMTLevel[1,2,3]
Overview,andwillanswerthefollowingquestions:
WhydidtheCMTprogramneedanewcurriculum?
Howwerethecurrentreadingsselectedforthenewcurriculum?
Whydidtheprocessleadtodelaysforthecurriculum?
Isthecurrentcurriculumreallyanybetterthantheold?
Isthecurrentcurriculumlargerthantheoldreadinglist?
Howlongwillittakemetostudyfortheexamsbasedonthenewcurriculum?
Doesthenewcurriculumcomewithsampleexams?
HowdoIusethenewlearningobjectivestostudyeffectivelyfortheexams?
HowcanIfindenoughstudytimebeforethetestdatetoactuallyhaveachancetopasstheexam?
Willtheexamsbesignificantlyhardertopass?
WhatareascanIskipinmystudy?
CanIprintoutthiscurriculum?
WhatthingsshouldIbelookingforwithinthisnewcurriculum?
Willthisnewcurriculumjusthelpmepassanexamorwillitteachmesomethinguseful?
ArethereanytipsortechniquesIcanusetoimprovemystudy?
Thispresentationwillbetheplaceforyoutogetyourquestionsansweredaboutthenewcurriculumespecially
questionsyouhaventheardaskedoransweredbefore.Ifyoucannotattendthepresentationwhileitisbeingdelivered
live,youcanemailyourquestionsinaheadoftime.EmailallquestionstoGordonScott([email protected]).
Besuretoregisterforthesepresentationsrightaway.
CMTLevelIOverview,CMTLevelIIOverview,CMTLevelIIIOverview
TheMTArecentlylicensedtheCFAInstituteStandardsofPracticeHandbook.ThislicenseallowsMTAmembersto
accessthedetailedstandardsdevelopedbytheCFAInstituteovermanyyears.TheHandbookcouldserveasaguideto
bestpracticesforfinanceprofessionals.
Asanexample,undertheStandardsofProfessionalConduct,membersowecertaindutiestoclients.Theseduties
include:Loyalty,Prudence,andcare;Fairdealing;Suitability;Fairaccurate,andCompleteperformancepresentation;
andPreservationofconfidentiality.TheStandardsofPracticeHandbookprovidesadditionaldetailsonthemeaningof
theseduties,casestudiestoassistinunderstandingandstudyingthestandardsandexamplesthatclarifyhowto
implementthestandardsonthejob.Membersalsoowecertaindutiestoemployers.
Thesedutiesinclude:
Loyalty
Disclosureofadditionalcompensationarrangementsandtheavoidanceofaconflictofinterestunder
anyadditionalcompensationagreement
Aresponsibilitytomakereasonableeffortstodetectandpreventviolationsoflaws,regulationsand
ethicalstandardsbyanyoneundertheirsupervision.
Theseresponsibilitiestoclientsandemployersareindependentofeachotherbuttheycanalsoberelatedtoeachother.
Expandingonthedutytopreserveclientconfidentiality,theHandbookexplainsmembersmustkeepinformationabout
current,former,andprospectiveclientsconfidentialunless:
(1)Theinformationconcernsillegalactivitiesonthepartoftheclient
(2)Disclosureisrequiredbylaw
(3)Theclientorprospectiveclientpermitsdisclosureoftheinformation
Evenwellintentioneddisclosureswouldviolatethestandard.Forexample,amembermightbeaninvestmentadviser
whoreceivesacallfromaclientsayinghisaccountantrecommendsmakinga$50,000charitabledonationtoreduce
incometaxes.Theclientisseekinghelpidentifyingsecuritiesthatcouldbesoldtomaximizethetaxbenefit.Now,
supposetheadviserisontheboardofdirectorsofanonprofitorganizationworkingtoreducehomelessnessinherlocal
community.Sheknowsthenonprofitorganizationcouldbenefitfromagiftof$50,000andconsiderscallingthe
organizationsdevelopmentdirectorwithasuggestiontosolicitagiftfromherclient.Thatwouldbeaviolationofthe
StandardsofProfessionalConductbecausethememberwouldberevealingconfidentialclientinformation.Thereisno
exceptiontotheStandardforcharitablecauses.
Membersalsoneedtorespectclientconfidentialitywhenswitchingjobs.Rememberthatmembersoweadutyofloyalty
totheiremployers.Considerthecaseofamemberwhoisleavingonefirmtopursueasimilaropportunityatanother
firm.Beforeleavinghercurrentposition,themembercannotsolicitclientstobecomecustomersofhernewfirm.She
cannotsolicitprospectivecustomerseitherbecausethatwouldviolatetheStandardrequiringhertoactwithloyaltyto
heremployersinterests.
Solicitingcurrentandprospectiveclientspriortoleavingapositionforanewoneisunethicalandaviolationofthe
Standards.But,whataboutafteryoustartthatnewjob?Isitethicaltocontactformerclientsthatyouknowwellto
requesttheybecomecustomersofyournewfirm?Clientrecordsarethepropertyofthefirm.Contactingformerclients
throughclientlistsorotherinformationtakenfromaformeremployerwouldbeaviolationofthestandardrequiring
loyaltytoyouremployer.However,itispossibleundersomeconditionstosolicitformerclientswithoutviolatingthe
StandardsofProfessionalConduct.
TheStandardsofPracticeHandbookexplains:Simpleknowledgeofthenamesandexistenceofformerclientsisnot
confidentialinformation,justasskillsorexperiencethatanemployeeobtainswhileemployedarenotconfidentialor
privilegedinformation.TheCodeandStandardsdonotimposeaprohibitionontheuseofexperienceorknowledge
gainedatoneemployerfrombeingusedatanotheremployer.TheCodeandStandardsalsodonotprohibitformer
employeesfromcontactingclientsoftheirpreviousfirm,intheabsenceofanoncompetitionagreement.Membersand
candidatesarefreetousepublicinformationabouttheirformerfirmafterdepartingtocontactformerclientswithout
violatingStandardIV(A),DutiestoEmployers:Loyalty.
Thebottomlineis,intheabsenceofanoncompetitionagreement,aslongasthemembermaintainsherdutytoloyalty
toherformeremployer,doesnottakestepstosolicitclientspriortoleavingherformeremployer,anddoesnotmake
useofmaterialfromtheformeremployerwithoutitspermissionafterleavingthereisnoviolationoftheCodeand
Standards.Thisexampleillustrateshowethicsareapracticalproblemformemberstoconsider.Theexamplealso
illustratesthevalueoftheresourcesprovidedundertherecentlicensingagreement.
YoucandownloadacopyofthelatesteditionoftheStandardsofPracticeHandbookbyclickinghere.
Michael,Carr,CMT."TheNewEthicsQuestionsAdoptingtheCFAStandards."
TechnicallySpeakingJuly2015
Thenewethicsguidelinesmaygivecandidatesacaseofnervousnessregardingthenewstandardsinformationthey
mayfearitisawholenewareatheymuststudyandthattherearelotsofreadingsnecessarytomasterthenew
StandardsandPracticesinformation.Forthosewhoworry,listeningtoafewminutesofMichaelCarr,CMT,speakabout
thenewstandardswillputyourmindatrest.Theexamquestionswillnotrequireanymorethanacommonsense
understandingofthebasictextintheCFAStandardsandPracticesHandbook,Mikerecentlyexplainedinhiswebinaron
thesubject.
Inthispresentation,Mikeexplainswhythischangewasneeded.IronicallyitseemsthattheMTAmemberswerevictims
oftheirownsuccess.MikepointsoutthatbecauseoftheMTAmembership'shighstandardsofbehavior,oneweakness
oftheprogramhasbeenalackofcasestudies.ThiswasonereasontheMTArecentlylicensedtheCFAInstitute'sCode
ofEthicsandStandardsofProfessionalConduct.
MikewaspartoftheethicscommitteethatextensivelyresearchedandreviewedtheCFAstandards.Theycametothe
conclusionthatitwouldofgreatbenefitforourassociationtoadoptthesestandards.Amongotherreasons,itwasclear
thatthestandardsweremuchmorethoroughlyreviewedandvettedbyalargenumberofpeople,andcontinually
updatedbasedonrecentlegaldecisions.Mikeexplainedthisandmanyotherimportantdetailsinhismessageonthe
recentvideodiscussion.
Clickheretoviewhisrecentwebinarpresentation:
http://media.mta.org/videos/2015/cmt/ethics/ethics.html
LevelIandIIsampleEthicsquestions:
Inadditiontothepreviousstyleofethicsquestions,manyofwhicharestillapplicableunderthenewstandards,
questionsmayfeaturemorescenariospecificinformation.Thesescenariosarelikelytoberelatedtoobvioustrouble
spotsknowntogeneratequeriesfromfinancialpractitioners.Considerthefollowingexamples.
LevelIPracticeQuestion
DavidJohnson,asenioranalystwithabrokeragefirm,decidestochangehisrecommendationforthecommonstockof
PigeonIndustries,Inc.fromabuytoasell.Thischangeininvestmentadviceismailedtoallthefirmsclientson
Wednesday.Nextday,aclientcallsinwithabuyorderfor500sharesofPigeonIndustries,Inc.Inthiscircumstance,
Johnsonshould:
A. Accepttheorder.
B. Advisethecustomerofthechangeinrecommendationafteracceptingtheorder.
C. Advisethecustomerofthechangeinrecommendationbeforeacceptingtheorder.
D. Notaccepttheorderbecauseitiscontrarytothefirmsrecommendation.
AnswerforLevelIPracticeQuestion:
Correctanswer:C
Advisethecustomerofthechangeinrecommendationbeforeacceptingtheorder.
ThisquestioninvolvesStandardIII(B)FairDealing.
Reference:CodeofEthicsandStandardsofProfessionalConduct
LevelIIPracticeQuestion
Themosaictheoryholdsthatananalyst:
A. ViolatestheCodeandStandardsiftheanalystfailstohaveknowledgeofandcomplywiththeapplicablelaws.
B. Canusematerialpublicinformationandnonmaterialnonpublicinformationintheanalystsanalysis.
C. Shoulduseallavailableandrelevantinformationinsupportofaninvestmentrecommendation.
D. Canusematerialandnonmaterialnonpublicinformationintheanalystsanalysis.
AnswerforLevelIIPracticeQuestion:
Correctanswer:B
Canusematerialpublicinformationandnonmaterialnonpublicinformationintheanalystsanalysis.
ThisquestioninvolvesStandardII(A)MaterialNonpublicInformation.
Reference:CodeofEthicsandStandardsofProfessionalConduct
LevelIIIPracticeQuestion
AlyssaNewmark,CMTisaninvestmentadvisorandtechnicalanalystforhighnetworthclients.Aclientwithan
aggressiveriskprofileinhisinvestmentpolicystatementasksaboutinvestingintheTopShelfhedgefund.Thisfund,
basedinGreenwich,Connecticut,hasreported20%returnsforthefirstthreeyears.Thefundprospectusstatesthatits
strategyinvolveslongandshortpositionsintheenergysectorusingextensiveleveragewithoptions.Basedonher
overallfusionanalysisusingafundamentalandtechnicalexaminationofthefundsfinancialholdings,trackrecord,the
principalsinvolvedinmanagingthefund,thefeescharged,andthefundsriskprofile,Newmarkrecommendsthefund
totheclientandsecuresapositioninit.Thenextweek,thefundannouncesthatithassufferedalossof65%ofits
valueandissuspendingoperationsandredemptionsuntilafteraregulatoryreview.Newmarksclientcallshimina
panicandasksforanexplanation.
Giventhisinformation,whichofthefollowingstatementsismostcorrect?(2points)
A. NewmarksactionswereconsistentwithStandardV(A)asheranalysisofaninvestmentthatresultsina
reasonablebasisforherrecommendationdoesnotguaranteethattheinvestmenthasnodownsiderisk.
B. Newmarksactionswerenotlegitimatehasheranalysisofthisinvestmentisunfavorablybiasedduetoa
lackoffundamentalandtechnicalanalysis.
C. Newmarksactionswerelegitimateasshedidnothavetodiscussthematterwithherclientastherewas
limitedriskwiththisinvestment.
D. NewmarksactionswereinconsistentwithStandardV(A).
AnswerforLevelIIIPracticeQuestion:
Correctanswer:A
NewmarksactionswereconsistentwithStandardV(A).Analysisofaninvestmentthatresultsinareasonablebasisfor
recommendationdoesnotguaranteethattheinvestmenthasnodownsiderisk.
Comment:Newmarkshoulddiscusstheanalysisprocesswiththeclientwhileremindinghimorherthatpast
performancedoesnotleadtoguaranteedfuturegainsandthatlossesinanaggressiveinvestmentportfolioshouldbe
expected.(e.g.SuccessfulDueDiligence/FailedInvestment).
AreyoulookingforserioushelptopreparefortheCMTLevelIexam?
Clickherefordetails:http://cmtexam.nyif.com/
WhenyouregisterfortheCMTLevelIExamyouareembarkingonajourneytoreceiveoneoftheworld'smost
prestigiousinvestmentcertifications,fromtheorganizationthatpioneeredthedisciplineofTechnicalAnalysis.Tomake
sureyoupasstheexam,TheNewYorkInstituteofFinanceisofferingaoneofakindOnlinePrepProgram.Whenit
comestostudyingfortheCMTExam,it'snotjustaboutstudyinghard,butstudyingsmart.EnrollintheNYIFPrep
Program,andwe'llmakesureyoudoboth!Clickhereformoreinformation.
Video Resources
EDUCATIONALWEBINARSERIESFROMTHEARCHIVES
TheMTAspopularEducationalWebinarSeriesconductedlastyearhaspresentationswhichmayhelpyouinyourstudy
fortheexams.Severalofthemarestillrelevantdespitethecurriculumchange,andmorerecentwebinarshavealso
focusedontopicsnewtotheexam.Therecordingsofthesewebinarsarelocatedintheondemandarchives.
Thesevideosarehelpfulbecausetheywillfocusyourattentionontheapplicationofthetopicathand.Thiswillgiveyou
anideaofthekindofissuesembeddedinthequestionsoftheexam.Whilethesepresentersarenottalkingspecifically
aboutexamquestions,theyaredemonstratingtheapplicationoftheprinciplesyouarereadingabout.Thisis
particularlyusefulinsightforlevelIIandlevelIIIstylequestions.
Hereisalistofspecificlinksforthesepresentations:
TrendandReversionIndicatorsWillGeisdorf,CMT
MarketRiskCynthiaCase,CMT
Quantitative,StatisticalAnalysisMeravOvair,CQM
BehavioralFinanceLarryBerman,CMT
RiskManagementCharlieKirkpatrick,CMT
PricePatternsCharlesBasseti,CMT
TechnicalAnalysisBasicsMartinPring,CMT
Volume,OpenInterestandBreadthPerryKaufmann,CMT
PointandFigureCharting(LevelsIandII)JeremyDuPlessis,CMT,FSTA
ElliottWave(LevelsIandII)WayneGorman,CMT
AssetAllocation(LevelsIIandIII)MebaneFaber,CMT
CyclesConnieBrown,CMT
SelectionandDecisionusingRRGs(LevelIII)MatthewVerdouw,CMT