[Sparrow]

Hi,

I've been wondering if interpreting bid/ask spread can be used in short term trading. I think that market makers drop the bid or increase the ask if they want to bring their books back into balance.
This can completely halt a move or at least decrease momentum until the locals have unloaded some of their excess inventory. If the market will continue in the same direction afterwards depends on how determined buyers/sellers are.
Is someone else using this in their trading or is there an error in my theory?

Cheers