What caused Tuesday’s sharp drop in Apple’s stock price?

“Apple Inc.’s big weighting within the Nasdaq is starting to turn heads, especially after a sharp dive in the company’s share price on Tuesday morning created something that looked like a mini flash-crash,” David Berman writes for Seeking Alpha. “Apple, of course, has been growing in size as a technology company, with a massive market capitalization that gives it a 20% weighting within the Nasdaq 100 – a popular benchmark for exchange traded funds.”

Berman writes, “Apple shares plunged 5.5% at the start of trading – and when we say plunge, we mean a straight line down – and dragged down a number of other shares with it, along with the Nasdaq. The scene was reminiscent – if far more tame – of the dramatic dive in stocks in early May, when the Dow Jones industrial average fell about 700 points nearly instantly, before recovering.”

AAPL chart for Tuesday, September 28, 2010:

Read more in the full article here.

MacDailyNews Take: Apple’s massive size may have the additional benefit of making it too visible a target to be safely manipulated. Everyone’s watching now, criminals.

48 Comments

  1. This could also be a sign of success, too. It could be simply that people are trying to sell high, and with the economy as a whole tanking, people have been riding the Apple rocket, and they’re like, “Well, this is all wonderful for Apple, but I need my money now, so I’m going to take it back, thank you.”

  2. This could also be a sign of success, too. It could be simply that people are trying to sell high, and with the economy as a whole tanking, people have been riding the Apple rocket, and they’re like, “Well, this is all wonderful for Apple, but I need my money now, so I’m going to take it back, thank you.”

  3. It’s these WallStreet jackasses who came up with the idea that they can make money when a stock goes down. Why was this ever allowed to happen? That’s why stocks move on rumors now as much or more than actual happenings.

  4. It’s these WallStreet jackasses who came up with the idea that they can make money when a stock goes down. Why was this ever allowed to happen? That’s why stocks move on rumors now as much or more than actual happenings.

  5. “Get people talking about it as if something is wrong with RIM,” Cramer advises. “Then you would call the (Wall Street) Journal and talk the bozo reporter on Research in Motion and you would feed that Palm has got a killer it is going to give. These are the things that you must do on a day like today. And if you are not doing it, maybe you shouldn’t be in the game.”

    How do you drive Apple stock down to profit from your short position–especially when the company is just about to announce it’s new IPhone?

    “Apple–it is very important to spread the rumor that both Verizon and ATT have decided they don’t like the phone,” Cramer says. “It’s a very easy one to do. You also want to spread the rumor that it’s not going to be ready for MacWorld. And this is very easy, because the people who write about Apple want that story. And you can claim that it is credible because you spoke to someone at Apple. It is an ideal short. If I were short Apple, I would be working very hard today to get that. And the way you would do that is pick up the phone and call six trading desks. And say, listen, I just got off the phone with my contact at Verizon. And he has already said–we’re a Samsung house, we are a Motorola house. There is no room for Apple. They want too much. We are not going to let them in. We are not going to let them do what they did to music. And that’s a very effective way to keep a stock down.”

    http://tinyurl.com/3dmuu4

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