Using Stock $ENSC from December 22, 2021, Turbo Trading's Head Trader Robert Knight, MBA, explains what a fake halt is and what this means for traders. A transcript is below the video.
This is a video on how I said it looked like the stock was going to get halted on the way up, and then it was trading at $6.26, I guess, around $6, $5.90. And it didn't halt; it looked like it was going to level too. Like it was going to halt, but then all of a sudden, it's sold off.
So I just want to explain what I mean by a fake call. $ENSC, here pop middle of the day for some reason. And it gets halted to the upside or to the downside. If it moves in a certain time period, I think it's less than a minute, more than 10%. So on a low pro stock, it's much easier for, you know, it gets halted more often on its way up.
So this was the fourth halt up here. The stock spiked pulled back, and then it really started to run again. And it got up to the $6.20 that's where it was, and the volume was coming in, and it was locked at $6.20. And so when you see that on level two locked at $6.20 and millions of shares going through, I mean, it traded, you know, just about 2 million shares in that, in that two-minute time period.
When you see it locked like that in the shares are going through like crazy. That means that that's a circuit breaker. So because it was going up, they halted and, but the buying and the selling still can take place until they balanced or until all the orders are balanced, not balanced- sorry, pardon me. Until there are more buyers than there are sellers, then the circuit breaker goes, and it gets halted.
But when you see it locked like that, and then all of a sudden it, it continues to trade and trades to the downside. What that means is all of a sudden somebody- that the sell-side, imbalance in the sell-side has come in. And it negates, and it fills all the buyers and continues to sell-off. So the stock in effect has had a temporary halt though, you know, not the five-minute one, but they stopped it from going up.
But when all the, when more stock came in to sell and overwhelmed the buyers, then it kept trading and know it went. If there had been more buyers than sellers, then it would have gone into a five-minute halt, but because more sellers came in at that price, they flushed it down. Now, here again. We see. So that's a very negative-when you see a fake halt like that, what that means is there's a ton of sellers, all of a sudden coming into the market and, and it drove it down. It did halt it; it halts it again. Now it's going down to the gown side. All of those people that were buying this on the breakout at $6.20, thinking that it was going to go again.
Now they're all scrambling to get out of this trade. So what I say, if they called it's not, it's not fake. It just means that it looked like it was going to halt. And then. A huge amount of sellers come in, and they drive the market down, negating the need to hold the stock, and off it comes. So when you see a fake halt like that, you need to get out of the stock because it's, it's going to, it's going to collapse.