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.
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(View all)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.
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?