What does it mean when the Ask price is moving up and away from the Bid price?
Is this a sign of a higher trending stock?
2006-12-05 01:43:29 · 3 answers · asked by Matt K 4 in Business & Finance ➔ Investing
Unfortunately, there can be many answers to this question. Your idea is correct in some circumstances, however it could be a supply and demand imbalance, major news event, etc...that cause the bid and ask to diverge. Another theory, at least on the NYSE where there is still a specialist selling, is that since he is responsible for trying to maintain an orderly market, and he has access to the order book of limit orders, he can manipulate the bid and ask to anticipate what will happen should a stock hit a certain price.
I know this doesn't completely answer your question, but I hope it helps.
2006-12-05 01:50:50 · answer #1 · answered by Jason P 1 · 0⤊ 0⤋
Certainly this happens when the stock is trending upwards.
However, it also happens when liquidity is drying up or uncertainty increases.
2006-12-05 11:29:23 · answer #2 · answered by Ranto 7 · 0⤊ 0⤋
Correct it is trend north, you need to look at the volume. too
2006-12-05 09:51:35 · answer #3 · answered by Wael 3 · 0⤊ 0⤋