then we would have seen a wide spread down candle, and not a narrow

spread candle.
Now this candle and volume relationship also raises another much deeper
question,
and here we go back to the insiders, and the market makers.
If we return to our bullish example again, with the narrow spread candle and
the high
volume, the question we might reasonably ask, is 'who is actually selling
here?' Is it
the investors and speculators, exiting the market after the trend run higher, or
is it
another group perhaps? Maybe it is the insiders and the market makers ? Who
is it
more likely to be? After all, we know that most investors and traders tend to
buy at
the top when in fact they should be selling, and sell at the bottom when they
should
be buying. Something which the specialists and market makers are well
aware of in
the psychology and make up of most traders and investors.
They also know this group is easy to frighten out of the market. Generally,
they get
in far too late after a bullish trend has been in place for some time, and only
jump in
when they feel it is safe, having watched the market move higher and higher,
regretting the decision not to enter much earlier. As the late Christopher
Browne
once said ‘The time to buy stocks is when they are on sale, and
not when they are
high priced because everyone wants to own them. This
sentiment applies to any
instrument or market. Buying when ‘on sale’ is always at the bottom of a
trend, and
not at a top!
'Missing an opportunity' is a classic trader (and investor) fear. The trader
waits and
waits before finally jumping in, just at the point when the market is turning
and they
should be thinking of getting out. This is what the insiders, specialists, market
makers and big operators bank on, trader fear. Remember, they see both sides
of the
market from their unique and privileged positions.
Back to the question! The specialists have driven prices higher, but the
market is
now struggling at this level. They are selling to the market to clear their
warehouse,
but the buyers are not there in sufficient numbers to move the price higher, as
it is
constantly knocked back by longer term traders, selling out and taking their
profits
off the table. The specialists continue selling into the buying, but the volume
of
buyers is too small, in contrast to the number of sellers, to move the price
significantly higher, as each attempt to push the market higher is hit with
more
selling, which in turn is replenished with more buyers.
What is actually taking place here is a battle. The first sign of a real struggle,
with
the specialists struggling to clear their warehouse before moving the market
lower,