Chartered Market Technician (CMT) Level 1 Practice Test

A primary bull phase is fundamentally characterized by rising investor confidence and expects an upward movement in stock prices, often driven by improving economic conditions, increased corporate earnings, and favorable market sentiment. As companies report higher earnings and better financial performance, this tends to attract more investors, creating a positive feedback loop that fuels the bull market.

The choice referring to the response to increased corporate earnings aligns with this principle, as strong earnings reports can lead to increased buying interest in stocks, further propelling prices upward. During a primary bull phase, optimism prevails in the market, leading to higher valuations based on anticipated future profit growth.

In contrast, the other options describe scenarios that are inconsistent with the characteristics of a primary bull market. Abandonment of hopes and distress selling represent negative sentiments and conditions that are more typical in bear markets or corrections. Price movements retracing from 33% to 66% could refer to specific technical patterns like Fibonacci retracements, but they do not define the overall sentiment or conditions of a primary bull phase, which is marked by optimism and upward momentum rather than retracement.