medium · Volume Spread Analysis effort-vs-result-spread
During a market rally, a market-maker expects still higher prices and has very few sell orders on their books. When a buyer enters, the market-maker marks the price up aggressively, resulting in a wide-spread up-bar on high volume.
What does this indicate?
- The market-maker is bearish and is trying to finish distributing stock as fast as possible.
- The market is entering a 'climax' phase where demand is completely exhausted.
- The wide spread is a sign of lack of interest, as professionals are stepping aside.
- The market-maker is bullish and is forcing buyers to pay higher prices to maintain inventory.
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