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Question: I was unable to buy a stock one morning, shortly after the market opened. But I couldn't find out why.

A BuyandHolder

Answer:

Dear BuyandHolder,

That does happen now and then -- usually only for a relatively short period of time. It's called a "delayed opening" or "held at the opening" and takes place when there's a large imbalance in buy and sell orders. In other words, when buy and sell orders are grossly out of balance with each other.

One of the most common reasons for this imbalance is that there's news about a possible takeover of the company. However, a delayed opening might also occur when there's a pending news announcement about a key event relating to the company -- terrible earnings, death of the CEO or other executive, a huge strike, even a plant fire, etc.

When such news is circulating about or about to be made public, officials at the stock exchange want to give investors time to absorb such information. Delayed at the open helps avoid panic buying or selling of shares.

You mentioned that you were unable to purchase the stock in the morning. I assume that to mean at the opening of the market. Sometimes, however, exchange officials will also temporarily stop the trading of a stock during the course of the trading day. This is technically called a "trading halt." It's often for the same reasons as a delayed at the opening -- because of a major news announcement or an imbalance of orders to buy and sell.

When a related but slightly more serious situation occurs and trading is stopped, it's referred to on Wall Street as "suspended trading." Suspended trading technically lasts longer than a delayed opening.

Sometimes, there's a delay in trading that is not related to company news or an imbalance in buy and sell orders. For example, in commemoration of the one year anniversary of 9/11, the American Stock Exchanged delayed its opening on September 11, 2002 until 11am, EST.

When you next encounter a delay at the opening, check the news on radio or TV or with your favorite source of online business news. If you own shares in the company, you will want to gather the facts in order to make an informed decision about your position.

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