Tuesday, December 2, 2014

AAPL Apple 5-Minute Chart Mini Flash Crash 12/1/14

Traders continue discussing the large drop in Apple yesterday where over $40 billion in market value disappeared within two minutes. The bottom fell out of AAPL at 9:48 AM EST with price plummeting to the 111.27 low at 9:50 AM. The less than two-minute mini-crash is a -5.1% drop. From yesterday's closing print at 118.93, the drop in price to the 111.27 low is a -6.4% collapse in the beloved Apple. As the chart shows, Apple recovered and closed down -3.3% on the session.

The proverbial fat-finger trade is always a popular excuse for the erratic market action. A couple hours earlier there was news that GOOGL is taking over from AAPL as the leading supplier of laptops and electronic gadgets to schools which may have had a small impact. Traders conclude that the move was profit-taking. When something cannot be explained, the good ole 'profit-taking' reason appears. Computers perform over 80% of the daily trading so chances are a sell program went amuck. Note the large volume candlestick on the selling. A large holder of stock wanted out and simply dumped the stock on the market. It may have been a rogue program that instead of selling the block incrementally, say over a couple hours or even over the course of the day, the shares were dumped in a  heartbeat.

Traders and investors laugh off the flash crashes and software glitches at exchanges. All that matters is the central banks providing easy money to send stock prices higher. In the future, perhaps days, weeks or months from now, after a flash crash event occurs a la the May 6, 2010, debacle, everyone will look back and say that no one could see it coming. As Keystone periodically highlights on this blog, the running tab of mini crashes, software malfunctions and other exchange problems keep increasing. For further study, type "Flash Crashes" into the search box at the right margin to bring up a comprehensive list of all the problems at market exchanges since the 2010 flash crash. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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