What First Trade Charts Are

These horoscopes are set up for the date that an issue was listed on a given exchange. The time is that of the opening of trading for the exchange for that day. The New York Stock Exchange (NYSE) and the smaller bourses began trading at 10 am until September 30,1985. Starting on that date, trading began at 9:30 am. Subsequent horoscopes are set for this earlier time. The center for Wall Street action is the Big Apple, so all charts are set for New York City.

A bit of explanation about the history of a company and its shares will be helpful in understanding this concept. First, a business opens its doors. Then, if it has not already, it incorporates. If shares are sold to the public, the sale takes place through an underwriter. The underwriter lines up buyers and then sells stock on the initial public offering (IPO) date. This puts a supply of stock in public and institutional hands. About one to five business days later, the stock opens trading.

A major new issue of a leading company may be listed directly on the NYSE, as Readers Digest was on February 15,1990. The two dates, IPO and first-listing, occur close together. I have found the first trade date to be the more important of the two. Customarily, the chairman or president of the company will go to the floor of the exchange and make a token, personal purchase of 100 or 1,000 shares to kick off the trading. In the words of a NYSE official, trading begins "almost immediately." Thus, the choice of the 9:30 or 10:00 am time for the charts is supported by fact.

The IPO and the first-trade date are frequently confused. I have found errors on Reuters, IPO Central, and on the NASDAQ-AMEX web page. The point is that the stock was available for trade on a specific date at a given time. It does not matter if a trade is placed at that time. With very popular issues such as Netscape, there are so many orders that it requires some time to sort out the orders. During this period, the price does not change. In the case of Netscape, the orders did not get balanced until 11:05 am. It is not true that the stock is not trading; it is trading but the price has not been settled. You can call and place an order, but you will not know what price the order has been filled at for a while.

In fact, George Bayer wrote these words sixty years ago:
"If listed on an exchange, erect it for the first day of listing on the exchange. In case a stock first listed on the Curb or some other exchange and later transferred to the Big Board, make a new horoscope for the Big Board and forget about the old listing. That horoscope died out with the transfer.

"Do not watch for the exact time of the first trade. It might occur at 10:10 or at 12:15, even the next day, but due to the fact that no important aspect occurred previously that would have casued a trade, the stock just simply did not sell. However, it could have been traded at 10 am, if one wanted to trade in it. This is important to recognize."

Sources of First Trade Dates

The data is gathered from the various exchanges. Data on the NYSE stocks was obtained from the research area of the Exchange. OTC dates are from the National Association of Securities Dealers (NASDAQ). Every effort has been made to ensure accuracy. No liability is assumed on the part of Bill Meridian from the use of this data. Because this information is generally only available to NYSE member firms, this valuable database is your best source.•••