medium · Volume Spread Analysis effort-vs-result-spread
A stock that has been rising for three months produces a wide-spread up-bar that closes on its high with ultra-high volume. The next day, the price opens lower and closes down.
What does this 'Effort versus Result' outcome suggest?
- The stock is simply performing a normal 'test of the breakout' on lighter volume and should resume its uptrend shortly.
- This is a 'Shake-out' deliberately engineered by professionals to trigger short-seller stops before the next strong leg up commences.
- The professionals are deliberately marking the price down to allow 'Strong Holders' and other insiders to accumulate more shares at a discount.
- The ultra-high volume contained significant professional selling (supply), and the effort to rise failed to produce follow-through.
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