'Premeditated Flash Dump' of Apple Shares Behind Friday's Last-Second Slump, Says Trader

[MacRumors]

A blog entry at Zero Hedge suggests that a deliberate share dump in the final second of trading may have been partly responsible for yet another drop in Apple's share price on Friday.

Zero Hedge cites several Nanex charts as evidence, observing that some 800,000 shares worth $350 million were traded in the final seconds of trading on Friday.

Unlike traditional flash crashes where the trade is an HFT [high-frequency trading] error, or a few shares traded through the entire bid or offer stack, in this case it looks like a very premeditated unloading of some 800K shares (some $350 million worth) of AAPL in the last second, with the full knowledge it [would] shake the market.

The move brought Apple's stock price down by approximately $5 in the waning seconds of the week's trading, where it sat throughout much of the after-hours trading period leading into the reopening of regular trading this morning. Apple's stock is down another $3.50 as trading opens today.

Article Link: 'Premeditated Flash Dump' of Apple Shares Behind Friday's Last-Second Slump, Says Trader

 

[ArtOfWarfare]

I'm glad I don't own any stocks... it just sounds too risky...

 

[samcraig]

..or the transaction just came in late. Who can say for sure. Maybe the order was put in earlier but was delayed or held.

I doubt there's any "conspiracy" here.

 

[JaySoul]

Didn't Apple already dump Flash?

 

[hovscorpion12]

This move is called shorting the stock. get owners scared, sell. Once the price gets to a designated spot, start buying again. Its extremely risky, but making making money on loss, priceless. Apple's stock is going to continue to fall to cover the gap. Apple could go bellow 400.00 by February. Apple is in trouble if it doesn not fix it this year. Apple can easily retake the market with a revampt IOS 7, iPhone, iPad and a new "special product."

 

[fasterthanfiber]

This move is called shorting the stock. get owners scared, sell. Once the price gets to a designated spot, start buying again. Its extremely risky, but making making money on loss, priceless. Apple's stock is going to continue to fall to cover the gap. Estimate price per share my Friday is below 400.00.

I can't see them going up to anywhere near where they are - if owners sold means they are at a loss - why would they rebuy? I can imagine this will trigger a mass-sell.

 

[extricated]

This move is called shorting the stock.

I up-voted your comment - not because I liked it, but because you nailed it.
Many people don't realize the type of "artificial" manipulation of the market that shareholders can weild.

I heard again on the news today about how Apple stock tanked last week because they fell short of analyst's predicted earnings - albeit with another record-breaking quarter?

 

[CausticPuppy]

If you look at the long term trend, 2012 looks like an anomaly.... right now the stock is back in line with the trend over the previous few years, maybe a tad below.

http://www.google.com/finance?chdnp...e&q=NASDAQ:AAPL&ntsp=0&ei=eZAGUcjeLJP6lgPA-QE


Even right now, the stock price is still higher than it was 12 months ago. People who are investing long-term shouldn't be fazed.

 

[ck2875]

If they're just going to artificially manipulate the stock markets, shouldn't it be illegal for Analysts to have a stake in the companies they toy with? (I'm not just talking Apple here.)

 

[Moopy Sac]

This move is called shorting the stock. get owners scared, sell. Once the price gets to a designated spot, start buying again. Its extremely risky, but making making money on loss, priceless. Apple's stock is going to continue to fall to cover the gap. Apple could go bellow 400.00 by February. Apple is in trouble if it doesn not fix it this year. Apple can easily retake the market with a revampt IOS 7, iPhone, iPad and a new "special product."

Shorts are considered sales for calculating volume?

 

[Rogifan]

I can't see them going up to anywhere near where they are - if owners sold means they are at a loss - why would they rebuy? I can imagine this will trigger a mass-sell.

It's up almost 2% this morning. Is it normal for mega cap stocks like this to be so volatile?

 

[Dan--]

This move is called shorting the stock. get owners scared, sell. Once the price gets to a designated spot, start buying again. Its extremely risky, but making making money on loss, priceless. Apple's stock is going to continue to fall to cover the gap. Apple could go bellow 400.00 by February. Apple is in trouble if it doesn not fix it this year. Apple can easily retake the market with a revampt IOS 7, iPhone, iPad and a new "special product."

Ok, no one knows for sure where the price is headed, (especially not me) but as of right now, about 10:05 AM Monday, the stock is at 448.23 +8.35 (1.90%). It looks like they sold it around 443. So at this point, these folks are out a little over $4M.

Risky indeed.

 

[hovscorpion12]

Shorts are considered sales for calculating volume?

When an investor goes long on an investment, it means that he or she has bought a stock believing its price will rise in the future. Conversely, when an investor goes short, he or she is anticipating a decrease in share price.

Short selling is the selling of a stock that the seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered. That may sound confusing, but it's actually a simple concept.

when you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later, you must "close" the short by buying back the same number of shares (called covering) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.

 

[Anonymous Freak]

I heard again on the news today about how Apple stock tanked last week because they fell short of analyst's predicted earnings - albeit with another record-breaking quarter?

Yup - how much of the loss was honest "fell short of analyst's predictions" reaction vs. how much was this flash dump? Most of the loss appeared in the last seconds of trading, which appears to be this flash dump. One would expect that any loss due to analyst statements would have occurred right after the earnings announcement.

 

[everything-i]

I up-voted your comment - not because I liked it, but because you nailed it.
Many people don't realize the type of "artificial" manipulation of the market that shareholders can weild.

I heard again on the news today about how Apple stock tanked last week because they fell short of analyst's predicted earnings - albeit with another record-breaking quarter?

Apple is a good buy at the moment based on the companies fundamentals. This dump was calculated to trigger a lot of automatic trading when peoples stop loss limits were hit. Big investors manipulating the market to pump some money out of the small investors. Nothing new, eventually it will settle down once all big investors think they have milked it enough.

 

[184550]

One of the more interesting articles I've read on MR lately. Hope there are more like this in the future now that another member of staff has been added.

 

[J1989]

Conspired

I imagine it is not illegal for large funds to conspire to short a stock, but I wonder if reinstatement of the uptick rule would slow it down. The same with High Frequency Trading.

 

[WhoDaKat]

Some people need to do some research on High Frequency Trading. This isn't some investor, this is a huge faceless corporation purposefully trying to tank Apple's stock. Just wait. I've got a $1 that says Google is behind this.

 

[moobatticus]

I always find it amazing how easy it seems to be able to manipulate stock or even economies by talking them down. "Not innovating", "running out of ideas" - and so called analysts overestimating, so that even with record profits and new products (iPad Mini for example), they still manage to shake investors.

Still, can you imagine having bought APPL in 1996 and then selling in 2011?!

 

[kas23]

I'll buy some more Apple stock once it falls below $400. Shouldn't be too long now.

 

[iMikeT]

I saw this happen live on my AAPL chart last Friday and now I know the reason behind it. It didn't last for more than a couple of seconds where the price dropped ~$4.50/share then quickly climbed back.

Yes people, these things are easily manipulated by the big guys to make lots of money off much smaller investors.

----------

I'll buy some more Apple stock once it falls below $400. Shouldn't be too long now.

You'll be waiting longer than you thought as AAPL is back above $450 at the moment.

 

[tatonka]

It sure is time that this high frequency trading is somewhat regulated on a global level. After the 2008 crash, the banks are back up on top gambling with our money again, while average people are still suffering from the crisis. This sort of stock trading has nothing to do with evaluating the value of a company or its chances to prevail, it is simply playing odds of quickly shifting very large amounts of money forth and back.

 

[johncrab]

Apple is just Wall Street's latest cash cow. Here is how it works:

Big institutional investors get together in back rooms and choose companies they know are really solid and have profit in their future. They set irrationally high quarterly numbers or claim a company "did not exceed expectations by enough". They start a plunge by selling short a large block of shares to create panic. Then other companies and individuals panic (predictably) and dump their shares thinking the sky is falling. The share price plunges.

When the damage has been done and a share price has been devalued 20-30%, the big investors start buying back those shares. Momentum builds and drives the price back where it was and they make billions as the price rises, more than offsetting the short sell they used to start this march of the lemmings.

I watched Wall St do this to GE at 8 month intervals in the late 80's, working a 10 point drop then rise. GE killed this with repurchase programs but the same thing has happened to HP and Microsoft and other companies. It is extremely predictable once it starts but only the fat cats make the real money, basically by defrauding smaller investors by making them panic.

 

[iMikeT]

It sure is time that this high frequency trading is somewhat regulated on a global level. After the 2008 crash, the banks are back up on top gambling with our money again, while average people are still suffering from the crisis. This sort of stock trading has nothing to do with evaluating the value of a company or its chances to prevail, it is simply playing odds of quickly shifting very large amounts of money forth and back.

Apple is just Wall Street's latest cash cow. Here is how it works:

Big institutional investors get together in back rooms and choose companies they know are really solid and have profit in their future. They set irrationally high quarterly numbers or claim a company "did not exceed expectations by enough". They start a plunge by selling short a large block of shares to create panic. Then other companies and individuals panic (predictably) and dump their shares thinking the sky is falling. The share price plunges.

When the damage has been done and a share price has been devalued 20-30%, the big investors start buying back those shares. Momentum builds and drives the price back where it was and they make billions as the price rises, more than offsetting the short sell they used to start this march of the lemmings.

I watched Wall St do this to GE at 8 month intervals in the late 80's, working a 10 point drop then rise. GE killed this with repurchase programs but the same thing has happened to HP and Microsoft and other companies. It is extremely predictable once it starts but only the fat cats make the real money, basically by defrauding smaller investors by making them panic.

The only way to prevent the manipulation is with strong regulations. Of course that will never happen as politicians are in the back pockets of these Wall Street fat cats.

 

[SnowLeopard2008]

It's pretty obvious that Apple stock is severely undervalued right now and the main reason why it's so low is because of some Wall Street manipulation. Nothing new. This is what Wall Street does for a living.