medium · Volume Spread Analysis effort-vs-result-spread

In the context of market-maker behavior, why is a narrow spread on an up-day with high volume considered bearish?

  1. It indicates market-makers are selling to buyers, capping the upside potential.
  2. It represents a successful test of remaining supply in a rising market.
  3. It shows that market-makers are marking prices up far too aggressively and rapidly.
  4. It signals that there are effectively no willing sellers left anywhere in this market.

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