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Sudden 9% drop in Apple stock triggers temporary trading halt [u]

post #1 of 66
Thread Starter 
Trading of Apple was briefly halted on Wall Street Friday morning after the stock took a sudden and unexpected plunge of 9.4 percent.

Update: The culprit of the AAPL stock price drop has been linked to volatility caused by three erroneous trades from BATS' systems. BATS Global Markets Chief Executive Joe Ratterman announced that he was withdrawing his company's IPO after Friday's fiasco. The original price for the 6.3 million share IPO was set between $16 and $18 a share, but the stock ended the day down 99.76 percent to finish at $0.04. Apple shares leveled out and finished the trading day at $596.05, down 0.55 percent.

Just before 11 a.m., AAPL plunged to $542.80, down more than 9 percent in what The Wall Street Journal said was likely an accidental "fat-finger trade." Five minutes later, trading resumed at a price just under $600.

The temporary halt was triggered by orders placed through the BATS Global Markets, which were well below where Apple had previously been trading. Orders first came in at $551.66 and quickly dropped to $542.80.

BATS has been facing technical issues, as its website notes it is "actively investigating an issue." Issues in the exchange have apparently applied to symbols ranging from 'A' to 'BF.'

BATS relies on high-speed traders as its key clients, catering to trading firms that capitalize on nanosecond price changes. Coincidentally, on Friday the Journal revealed that the SEC has initiated a probe into rapid-fire trade firms, prompted by the "flash crash" of May 2010 when stocks fell and rebounded sharply within minutes.

[ View article on AppleInsider ]
post #2 of 66
I sincerely hope this was an accident!
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
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From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
Reply
post #3 of 66
Or the dividend payment doesn't come fast enough.

That leads to my other explanation; one or some of hedge fund who owns the stock need cash, cold hard cash, very fast. And they sold a large chunk of AAPL to get it.

I wonder what happen across the Atlantic that they will need money for? Or maybe somewhere in the U.S.?
post #4 of 66
If your profitability depends on how near your servers are to the exchange's servers (so you beat the other high speed traders to the punch) then this is no longer the type of trading the exchanges were designed for.

These trading programs cheat by placing orders, taking a peak at the offers, then because they are fast enough, to cancel the orders in a blink of an eye if the price isn't right before the buy is executed. Or something to that effect. Conceptually, it's insider trading because you are privy to information that manual traders can't even take a glimpse at.

And guess who's one of the biggest innovators, if no the biggest, in this type of trading? Yes! That giant vampire squid sucking on the face of humanity, Goldman Sachs.

Whenever evil is being perpetrated in the financial world, Goldman Sachs is right smack in the middle of it.
post #5 of 66
"The End-Time is Here - 2008 was God's last warning, 2012 is economic collapse & WW III"

Rather ironic Google Ad to place on this thread.

I hope the world doesn't end before the Olympics and the iPhone 5
post #6 of 66
In other news Apple investors set the world record for the number of people exclaiming "Oh shit!" at the same time.

This bot has been removed from circulation due to a malfunctioning morality chip.

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This bot has been removed from circulation due to a malfunctioning morality chip.

Reply
post #7 of 66
Quote:
Originally Posted by Fairthrope View Post

Or the dividend payment doesn't come fast enough.

That leads to my other explanation; one or some of hedge fund who owns the stock need cash, cold hard cash, very fast. And they sold a large chunk of AAPL to get it.

I wonder what happen across the Atlantic that they will need money for? Or maybe somewhere in the U.S.?

Sounds like a "fat finger" or system error...Trades cancelled...

BATS is having issues all morning with stock tickers that start with A or B...

"Fast Money" trying to hype up news on a quiet day, don't listen to the "talking heads" on that show.
post #8 of 66
Quote:
Originally Posted by tundraboy View Post

If your profitability depends on how near your servers are to the exchange's servers (so you beat the other high speed trader's to the punch) then this is no longer the type of trading the exchanges were designed for.

These trading programs cheat by placing orders, taking a peak at the offers, then because they are fast enough, to cancel the orders in a blink of an eye if the price isn't right before the buy is executed. Or something to that effect. Conceptually, it's insider trading because you are privy to information that manual traders can't even take a glimpse at.

And guess who's one of the biggest innovators, if no the biggest, in this type of trading? Yes! That giant vampire squid sucking on the face of humanity, Goldman Sachs.

Whenever evil is being perpetrated in the financial world, Goldman Sachs is right smack in the middle of it.

Hey, they need to make a lot of money. Impunity is very expensive.
post #9 of 66
Quote:
Originally Posted by syracuse View Post

Sounds like a "fat finger" or system error...Trades cancelled...

BATS is having issues all morning with stock tickers that start with A or B...

"Fast Money" trying to hype up news on a quiet day, don't listen to the "talking heads" on that show.

A decidedly inauspicious IPO for BATS.

BATS says that they have resolved the issues for trading of symbols between A and BF, however trading of BATS shares have been halted until further notice. They opened lower than their IPO price of $16 per share.

The problem wasn't specific to Apple although much of the media coverage has sensationalized the errant trade of AAPL without fully explaining the situation.

Journalism is dead.
post #10 of 66
Quote:
Originally Posted by syracuse View Post

Sounds like a "fat finger" or system error...Trades cancelled...

BATS is having issues all morning with stock tickers that start with A or B...

Are you sure? Nothing goes boom around Canary Wharf or Wall Street that somebody need to cash out right now?

(portfolio or fund goes boom of course, not the building)
post #11 of 66
What a BATShit system of trading.

They should simply shut down these low-lifes.
post #12 of 66
CNBC had reported that it was a single 100 share trade.
post #13 of 66
AAPL hasn't been doing that great for these past few days.

And that's after Apple announced the dividend and the incredible iPad sales figures.

I think that Apple should have spread that news out and not mentioned both on the same day.
post #14 of 66
Quote:
Originally Posted by OldMacGuy View Post

CNBC had reported that it was a single 100 share trade.

How the hell can a 100 share trade drive down a stock that much? Especially with Apples share price and volume?
Crying? No, I am not crying. I am sweating through my eyes.
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Crying? No, I am not crying. I am sweating through my eyes.
Reply
post #15 of 66
At this point, all the good news for AAPL has been revealed. Veteran traders (not investors) will be looking to take profit. Whether it'll go to $1000 after dropping at least 5-10% is not what those guys would worry about right now.
post #16 of 66
Quote:
Originally Posted by tundraboy View Post

If your profitability depends on how near your servers are to the exchange's servers (so you beat the other high speed trader's to the punch) then this is no longer the type of trading the exchanges were designed for.

These trading programs cheat by placing orders, taking a peak at the offers, then because they are fast enough, to cancel the orders in a blink of an eye if the price isn't right before the buy is executed. Or something to that effect. Conceptually, it's insider trading because you are privy to information that manual traders can't even take a glimpse at.

And guess who's one of the biggest innovators, if no the biggest, in this type of trading? Yes! That giant vampire squid sucking on the face of humanity, Goldman Sachs.

Whenever evil is being perpetrated in the financial world, Goldman Sachs is right smack in the middle of it.

Wall Street ownership of Congress will keep an outright ban of high speed training from happening, but there is a solution that could be even better:
Return to having a small tax (e.g. 1/4%) against each stock transaction. This is already done in most of the world.
That means
1) an automatic disincentive for the leeches who are gaming the system by put out thousands of micro-bids that test the market, and are the things that trigger these events.
2) if you're serious about nat'l debt reduction (and not just a Norquistian anti government fanatic) this brings in a LOT of revenue with little or no pain to 99%.
post #17 of 66
Quote:
Originally Posted by tundraboy View Post

If your profitability depends on how near your servers are to the exchange's servers (so you beat the other high speed trader's to the punch) then this is no longer the type of trading the exchanges were designed for.

These trading programs cheat by placing orders, taking a peak at the offers, then because they are fast enough, to cancel the orders in a blink of an eye if the price isn't right before the buy is executed. Or something to that effect. Conceptually, it's insider trading because you are privy to information that manual traders can't even take a glimpse at.

And guess who's one of the biggest innovators, if no the biggest, in this type of trading? Yes! That giant vampire squid sucking on the face of humanity, Goldman Sachs.

Whenever evil is being perpetrated in the financial world, Goldman Sachs is right smack in the middle of it.

Totally. Agree or disagree with the global warming stuff, but Goldman is right there trying to push the carbon tax credits stuff into law - oh, which they happen to have big investments in and stand to make tons of money on. Costs everyone else, again Goldman sitting there as the leeches bleeding everyone else dry. What a coincidence. (Sorry, I meant they are performing a vital service as a middleman taking money without doing anything useful.)
post #18 of 66
That messed up trade doesn't show up on AAPL Google, but it's definitely there, and it shows up on my trading software.

post #19 of 66
Quote:
Originally Posted by tundraboy View Post

If your profitability depends on how near your servers are to the exchange's servers (so you beat the other high speed trader's to the punch) then this is no longer the type of trading the exchanges were designed for.

These trading programs cheat by placing orders, taking a peak at the offers, then because they are fast enough, to cancel the orders in a blink of an eye if the price isn't right before the buy is executed. Or something to that effect. Conceptually, it's insider trading because you are privy to information that manual traders can't even take a glimpse at.

+1x10^8.

This is not trading based on an analysis of a company's prospects, or to invest in a promising industry or trade; this is nothing more than pointless manipulation of the markets (and other people's hard-earned investments) for the sake of skimming a little cream.
post #20 of 66
Shows just how made up the idea of stock trading is
post #21 of 66
post #22 of 66
Quote:
Originally Posted by Sierrajeff View Post

+1x10^8.

This is not trading based on an analysis of a company's prospects, or to invest in a promising industry or trade; this is nothing more than pointless manipulation of the markets (and other people's hard-earned investments) for the sake of skimming a little cream.

Again... RETURNING TO a small trade transaction tax would raise revenue, put a big crimp in these non-productive financial patterns, and affect only the 1%.

Push an idea that can actually happen and makes sense.
post #23 of 66
Quote:
Originally Posted by bigdaddyp View Post

How the hell can a 100 share trade drive down a stock that much? Especially with Apples share price and volume?

Two things:

1. Computers monitor changes. If there's a dramatic change, it can automatically trigger a stop in trading - even after a single trade.

2. Computer trading. It is not uncommon to have an order to sell if the price drops more than a certain amount. Thus, one weird sale can cause a lot more sales that would have a more permanent effect.

Fortunately, nothing significant happened in this case. It appears to have been a computer error that was quickly corrected. No harm done.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #24 of 66
I think it's quite a clever use of computers, making lots of micro trades and hoping it adds up. I don't think there's anything morally wrong with it, since every time you buy stock there must be someone else willing to sell, so no one's being forced.

The selling entity might even be a program at another company that is making a different guess about the future, so the party that puts the best information in to their program wins over the long run, same as any trading.
post #25 of 66
Quote:
Originally Posted by digitalclips View Post

I sincerely hope this was an accident!

Hope is a good thing to have but in this case it hope is not going to go far.

Executing sell orders for small lots is the best way to start a panic. It's doable and legal, however immoral.
post #26 of 66
Quote:
Originally Posted by bigdaddyp View Post

How the hell can a 100 share trade drive down a stock that much? Especially with Apples share price and volume?

It wasn't the number of shares but the price at which they were offered ($542.80) that created the alert. A price change of either up or down by 10 percent in a five-minute period will kick in the circuit breaker to halt trading of that stock.
post #27 of 66
Quote:
Originally Posted by CityGuide View Post

It wasn't the number of shares but the price at which they were offered ($542.80) that created the alert. A price change of either up or down by 10 percent in a five-minute period will kick in the circuit breaker to halt trading of that stock.

So it was one trader who messed up and put up 100 shares to sell at that low price?

If somebody else had a limit order just for fun to buy 100 shares at 550 or less, then would they have gotten those shares? Somebody could have gotten a few AAPL shares for a nice discount in that case.
post #28 of 66
Quote:
Originally Posted by Apple ][ View Post

AAPL hasn't been doing that great for these past few days.

And that's after Apple announced the dividend and the incredible iPad sales figures.

I think that Apple should have spread that news out and not mentioned both on the same day.

What? You are expecting a 3%+ rise day after day without end? The stock took a historic leap just a couple of weeks ago to $600 and pulling back a little is "AAPL hasn't been doing that great for these past few days." I really don't know about you.
post #29 of 66
Quote:
Originally Posted by SolipsismX View Post

In other news Apple investors set the world record for the number of people exclaiming "Oh shit!" at the same time.

Oh shit I didn't have an automatic buy in place. That's what I'm thinking.
post #30 of 66
Quote:
Originally Posted by lkrupp View Post

What? You are expecting a 3%+ rise day after day without end? The stock took a historic leap just a couple of weeks ago to $600 and pulling back a little is "AAPL hasn't been doing that great for these past few days." I really don't know about you.

Agreed. A slight pullback would be expected with some folks taking profits. It'll continue ever upward, but will have a few dips along the way.
post #31 of 66
Quote:
Originally Posted by bigdaddyp View Post

How the hell can a 100 share trade drive down a stock that much? Especially with Apples share price and volume?

It can't.
post #32 of 66
This is interesting. I never thought about proximity to the markets and how that might trading.

Quote:
Originally Posted by tundraboy View Post

If your profitability depends on how near your servers are to the exchange's servers (so you beat the other high speed trader's to the punch) then this is no longer the type of trading the exchanges were designed for.

These trading programs cheat by placing orders, taking a peak at the offers, then because they are fast enough, to cancel the orders in a blink of an eye if the price isn't right before the buy is executed. Or something to that effect. Conceptually, it's insider trading because you are privy to information that manual traders can't even take a glimpse at.

And guess who's one of the biggest innovators, if no the biggest, in this type of trading? Yes! That giant vampire squid sucking on the face of humanity, Goldman Sachs.

Whenever evil is being perpetrated in the financial world, Goldman Sachs is right smack in the middle of it.
post #33 of 66
Quote:
Originally Posted by lkrupp View Post

What? You are expecting a 3%+ rise day after day without end? The stock took a historic leap just a couple of weeks ago to $600 and pulling back a little is "AAPL hasn't been doing that great for these past few days." I really don't know about you.

AAPL is doing great of course.

I was just thinking about the immediate short term.

Don't mind me, I'm just a greedy bastard looking to make a few quick bucks.
post #34 of 66
Quote:
Originally Posted by ascii View Post

I think it's quite a clever use of computers, making lots of micro trades and hoping it adds up. I don't think there's anything morally wrong with it, since every time you buy stock there must be someone else willing to sell, so no one's being forced.

The selling entity might even be a program at another company that is making a different guess about the future, so the party that puts the best information in to their program wins over the long run, same as any trading.

I agree. You don't enter a game of football then get upset when the other team doesn't pass you the ball.
It is a game, expect to play and outwit your opponent, else get burnt.
post #35 of 66
How does a computerized system that does buys and sells on "nanosecond price changes" have fat fingers? If anything they are obfuscating the fact that those who are wealthy enough to afford access to BATS and other such systems reap millions or billions by the nano second while mere mortals have to watch the market crash and rebound as they profit in both directions.
post #36 of 66
Quote:
Originally Posted by Apple ][ View Post

AAPL hasn't been doing that great for these past few days.

And that's after Apple announced the dividend and the incredible iPad sales figures.

I think that Apple should have spread that news out and not mentioned both on the same day.

This is CLEARLY a day trader. Apple's stock has been through the roof the past few days. Maybe the past 3 days it's been down. But come on!!!

I wonder if shareholders are irrationally jittery about an iPad recall. 98 degrees is hot!

EDIT:
Just read this: A single trade for 100 shares executed on a Bats venue briefly sent Apple, the world’s most valuable company, down to $542.80, triggering a circuit breaker that paused the shares. The order was executed at 10:57 a.m. New York time. Two more transactions, which sent the stock back above $598, were made before the halt. The stock stayed around that level once trading resumed.

So it seems it WAS 100 shares. After looking at the ticker, and its steep sudden drop, it's clear something went awry. Maybe NASDAQ doesn't use Apple computers. This would never happen under OS X.
post #37 of 66
Example:
  • AAPL is around $600, and some people have Sell Orders at $590, 580, 570, 550 etc
  • AAPL suddenly drops 10% down to $540 for a few minutes or so, before the trading is halted by Wall St.

Qs:
  • Can the SELL & BUY Trades be Cancelled in such situations?
  • At what price would the Cancellation Line would be drawn?
  • Does Wall St. have a Clear Rule for such situations, where Investors can clearly get punished! And, if there is a premeditated crime behind such computer glitches, then it's a clear case of $$$ being stolen from the investors!

And then I remember the concept of Pump and Dump, which in a way does same thing, except its not as dramatic as today's computer glitch!

Wall St. would have to say something like:

We've seen $10-25 Drops on AAPL, Intraday or not, so we'll subtract that $10-25 Range from this Computer Error generated Drop, $60 Range = 10% of $600. Thus, every SEE & BUY Trade below $600 - 25 = $575 would be Cancelled, Invalidated, Undone!

In the above example I just picked easy numbers to deal with, but I don't think I am too far off from the Historic AAPL Prices…

I am looking forward to your Comments!

Go  Apple!!!

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Go  Apple!!!

Reply
post #38 of 66
Whoever bought when Apple stock took a dive and sold a little later made a ton of money. You just need to follow the money to see who profited. Then try to figure out how they were able to manipulate the stock and capitalize in realtime. Automatic trigger trades provide plausible deniability so it can get tricky.

This much ultra short-term decline and rebound in Apple stock is unlikely to be an unintentional fat finger. That's why the Feds are looking into it.
post #39 of 66
Quote:
Originally Posted by Fairthrope View Post

Are you sure? Nothing goes boom around Canary Wharf or Wall Street that somebody need to cash out right now?

(portfolio or fund goes boom of course, not the building)

I'm guessing here, but 100 shares doesn't smell like a hedge fund unwinding.

Sounds like something my 2yr old would do tapping away on my computer...
post #40 of 66
Quote:
Originally Posted by GQB View Post

Wall Street ownership of Congress will keep an outright ban of high speed training from happening, but there is a solution that could be even better:
Return to having a small tax (e.g. 1/4%) against each stock transaction. This is already done in most of the world.

With the new IRS reporting structure that is being phased in, it is only a few more years before they will do withholding on all capital gains. I doubt they will do withholding on sales directly though; that is too obvious.

If they withhold 38% of your 0.5% gain, the game gets much harder to play.
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