Chartered Market Technician (CMT) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

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Question: 1 / 400

A falling relative strength line for a stock in a rising market indicates what?

The stock is performing better than the market

The stock is at its peak performance

The stock is performing worse than the market

A falling relative strength line in the context of a rising market signifies that the stock is underperforming compared to the overall market. The relative strength line is a comparison of a stock's price performance to that of a benchmark index, such as the S&P 500. When the line is declining, it indicates that the stock's price is either falling or not appreciating as much as the benchmark index, even though the market itself is experiencing upward movement.

This situation is particularly concerning for investors, as it suggests a lack of investor interest or confidence in the stock despite positive overall market conditions. Therefore, option C accurately reflects the implications of a falling relative strength line in a rising market, indicating that the stock is performing worse than the market.

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The stock is gaining momentum

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