CFA CFA Level 1 Question of the Week – Quantitative Methods

Question of the Week – Quantitative Methods

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    • AdaptPrep
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      A highly publicized stock approaches $100 but falls before reaching the price. This pattern is continued for several months, until the stock jumps to $110. Which of the following is the most general consensus?

      • $100 is the new support level.
      • $110 is the new resistance level.
      • The stock is in an uptrend.
    • AdaptPrep
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      Before the jump, $100 was the resistance level, as the price
      was resisting going that high. It wouldn’t make sense for $110 to be a
      resistance level, because the stock has already increased to that point. There
      may or may not be an uptrend, but one increase does not make a trend. General
      thought would be, though, that the price of $100 is a support level — it is deemed unlikely the stock will
      drop below $100 because the resistance has been broken.

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