Halted trading occurs when a stock, security, or even an entire market stops trading temporarily. This can happen for several reasons:
1. News Pending or Significant News Announcement: If a company is about to release important information (like earnings, mergers, acquisitions, or regulatory issues), the stock exchange may halt trading to allow the news to reach the public and give traders time to react.
2. Unusual Price Volatility: If a stock experiences rapid and unexpected price movements, trading may be halted to prevent excessive volatility and give investors time to assess the situation.
3. Regulatory Concerns or Investigations: If there are concerns about insider trading, fraud, or other regulatory issues, trading may be halted to investigate further.
4. Market-Wide Circuit Breakers: When the entire market experiences significant drops within a short period, “circuit breakers” are triggered to halt trading across the market, allowing time to stabilize.
Once a halt is lifted, trading resumes, often with a notable shift in price as the market reacts to the underlying reason for the halt.
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