hard · Volume Spread Analysis effort-vs-result-spread
Two stocks in the same sector both rally on the same day. Stock A posts a wide spread on volume 50% above its average, closing at its high. Stock B posts an equally wide spread on volume 300% above its average, also closing at its high.
Applying effort-vs-result analysis, which statement about the two stocks is most accurate?
- Both bars are equally bullish, since a strong close on above-average volume is all this analysis requires
- Stock B needed far more effort for the same result, hinting at heavier supply absorbed and a less durable advance
- Stock B is the stronger buy candidate, since higher absolute volume always signals more committed institutional buying
- Stock A's lower volume makes its signal invalid, since this method needs volume to at least triple the average
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