Shares in Apple Computer experienced two sharp downward spikes today. But the price action is very different from what we saw yesterday with Progress Energy. Progress’ shares dropped 90 percent almost instantaneously. Even with today’s downward spikes, Apple’s trading between $275.00 and $291.77. It’s not exactly like the floor fell through.
So, is it more evidence of the sinister stock-trading robots taking over U.S. exchanges? Or is there a more rational explanation — that the stock market is responding to rumors of a high-level Apple exec’s departure?
The bearish Fight Club enthusiasts at Zero Hedge think Apple has experienced two mini flash crashes in one day. Former tech CEO Karl Denninger, blogging for Seeking Alpha, sees today’s Apple action as an indication that the market is too dangerous for the retail investor: “Folks, this sort of crap is totally out of hand. And it’s now a daily game that’s being played by the machines, which are the only things that can react with this sort of speed, and they’re guaranteed to screw you, the average investor or trader.”
Meanwhile, Dow Jones Newswires attributes the move to rumors that chief operating officer and Steve Jobs’ No. 2 man Tim Cook is leaving for Hewlett-Packard. (Cook has denied that he’s leaving.) Analysts said that Cook’s departure could cause H-P to spike. It sort of did — around 1 percent.
The Financial Times takes a balanced approach, but also stops to note that viewed over 10 days, Apple’s spike downward looks much more severe than it does on the intraday chart. Plus, there were weird spikes in other tech stocks — Research in Motion, IBM, Dell, General Electric, Oracle, Microsoft and the aforementioned Hewlett-Packard. (Some of these spiked higher, some lower.) Plus, weirdly, the dollar fell sharply against the yen, and several tech ETFs also showed very spiky action.
Whoever’s right, and it could very well be nobody, we can be confident of one thing: Even to seasoned market observers, sudden price moves in stocks don’t always have explanations that are immediately obvious. Careful out there!
Related: 10 Mini Flash Crash Stocks