Wow… AAPL Flash Crashed This Morning (Meaning, It’s Already Recovering)

Posted: December 1, 2014 in Apple, Business, Farros, Royal
Tags: , ,

Wow.  AAPL flash crashed at 6:51am pst this morning.

Within a minute, AAPL dropped almost 8 points… an almost 7% decline in the highest-valued company in the world.  That deserves a second wow.

It wasn’t based on news…

… because (1) the news on AAPL today was neutral.  While Adam Parker of Morgan Stanley was conservatively trimming his position in all of tech*, including AAPL… Barclays was raising its target to $140…

… and (2) all the news came out before the market opened… so presumably AAPL should have seen selling pressure out-of-the-gate, which it did not.

Instead, all the major selling happened during a 60-second slice of time… at precisely 6:51am pst… clearly the fingerprint of algorithmic trading.

There is chatter that the dive happened because someone tried to sell over six million shares at once… that’s about 10% of AAPL’s average daily volume… so that could have indeed mucked things up.

However, let’s be real:  That’s about a $700 MILLION dollar order… I’m pretty sure someone isn’t panic selling that by themselves on E*Trade… every professional in the world would know to s-l-0-w-l-y sell those shares over a period of time so as NOT to spook the market and therefore maximize the sales price.

I think this gets chalked up to a flash crash… a horrible, gut-wrenching by-product of modern-day “high frequency trading”… essentially computers trying to outdo computers making trades.  Not for the faint of heart.

Note that AAPL had cut its losses by more than half at the close… and if something truly systemic doesn’t get announced (as in, Apple issuing a profit warning or something), then we could see it retrace upward, maybe even this week… and helping this is yet another target raise tonight, this time by Canaccord Genuity (to $135 from $120)… so a nice potential trading pop may be set up for those that think that way.

*  Interesting that just last week Katy Huberty — of the very same Morgan Stanley — raised AAPL’s target to $126.  The lesson?  A bank can have multiple opinion makers… so it’s important to pay attention!

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