Chartered Market Technician (CMT) Practice Exam

Monetary indicators are categorized as external indicators because they provide insights into the economic environment outside of individual companies. These indicators, such as interest rates, money supply, and inflation rates, reflect the broader economic conditions and monetary policy actions that can impact financial markets.

Understanding monetary indicators helps analysts gauge changes in the economy that can affect corporate profits, consumer spending, and investment trends. For example, when interest rates rise, borrowing costs increase, which can dampen spending and investment. Conversely, when rates are low, economic activity may increase, potentially leading to higher market performance.

In this context, monetary indicators serve as key signals for investors regarding potential market trends and shifts, aligning them with external influences rather than solely company-specific or internal factors. This external perspective enhances overall market analysis and decision-making regarding investments.