Wake up everyone!  What’s with the sudden drop of AAPL in the last few minutes?

Good Morning Boys and Girls

The sponge did sell a little stock yesterday to protect my margin position.  I am safe now until 175.

Don’t know why the sudden drop, other then normal crazy market.  Apparently 200 support was critical and once we dropped below that there was a little panic selling.

We have recovered and I am not too worried, although we could see more volatility like this in the coming days.  I suspect we can see a further correction given how high we have gone.

Good Luck to all.

The drop in AAPL corresponded to the drop in consumer confidence for October.

Per CNN:

The Conference Board, the New York-based research group said its Consumer Confidence Index fell to 47.7 in October from an upwardly revised 53.4 in September.

Economists were expecting the index to increase to 53.5, according to a Briefing.com consensus survey. The figure, which is based on a survey of 5,000 U.S. households, is closely watched because consumer spending makes up two-thirds of the nation’s economic activity.

Why the sudden sell?

$ broke support / resistance (however you want to look at it)
Consumer confidence was horrid
Transports breaking trendlines

SPX needs to test 1055 range if it does not find support selling continues. 

AAPL is going to fill the gap very likely (hope I’m wrong but looks more probable now).

Tried to pick up some 2012 $210’s on the dip.  Didn’t get low enought to trigger the buy though.

We recovered quickly, but I think we could end up below 200 by end of the day.

It will be interesting to see what happens on Thursday when GDP numbers come out.  My gut tells me we will see the market recover.

Somebody is selling large volumes of AAPL.  Note on the intraday chart two big sales of 1.5 million shares which triggered the big drop in price.  Only 90 minutes into trading and volume is 13 million shares.  On an average day 16 million shares are traded.

artman1033 - 27 October 2009 10:27 AM

domsin - 27 October 2009 10:15 AM

Somebody is selling large volumes of AAPL.  Note on the intraday chart two big sales of 1.5 million shares which triggered the big drop in price.  Only 90 minutes into trading and volume is 13 million shares.  On an average day 16 million shares are traded.

Excellent point!
I was going to mention the same!!

Is that Galleon sinking?

Also before all this happened this was posted:

Gartman: The Market’s Screwed If Apple Can’t Hold $200 (AAPL, AMZN, GS)
Vince Veneziani|Oct. 27, 2009, 11:04 AM

Analyst Dennis Gartman touched on an important, yet brief point in his Gartman Letter this morning. He believes Apple (AAPL) has emerged as a new market leader, along with Amazon (AMZN) and Goldman Sachs (GS). He fears if Apple’s stock dips below the magical 200 mark, all hell will break loose.

Here’s how he describes yesterday’s market action

One by one lesser lights in the market were taken out behind the proverbial barn and shot, although the greater lights… the Apples, the Goldmans, and now the Amazons et al held well compared to the rest of the market. We fear they too may be taken out and shot sooner rather than later, for the margin clerks are now sharpening their pencils and when they do they are merciless. As we like to say, and as we have said time and time again, “When they raid the house of ill repute, the good girls and the piano player too go to jail.”

We shall watch Apple with particular interest, for this has been the true leader of the market over the past many months. Should it falter, the rest will falter too, for when the field General is shot and killed, the men below him scatter chaotically. So long as $200 holds, all shall be well; but if $200 is given… and especially if $195 is given… we’ll fear the worst for Apple and for the market generally. Attention, as we like to say, must be paid.

Right now both the Dow and S&P are up and Apple (AAPL) is floating right below 200 (see chart). What say you now, Dennis?

I’ve sold a few calls today as a hedge against my long position.  The $ looks like it is now losing the 20 day MA (eur/$) and aapl is looking both weak the past two days (weaker than the nasdaq) and is now kind of in no man’s land.  It broke through what should have been support (although right now it’s toggling back and forth at that level).  Shippers are getting hammered today which will pressure transports further.  I’m still net long but don’t fully trust this market.  There are many stocks there with good entry points after a little more selling so my theory is we need to get to those levels to bring back some good buyers and then move back up.  Just my take, certainly a tough one to call though.

runedge - 27 October 2009 11:19 AM

I’ve sold a few calls today as a hedge against my long position.  The $ looks like it is now losing the 20 day MA (eur/$) and aapl is looking both weak the past two days (weaker than the nasdaq) and is now kind of in no man’s land.  It broke through what should have been support (although right now it’s toggling back and forth at that level).  Shippers are getting hammered today which will pressure transports further.  I’m still net long but don’t fully trust this market.  There are many stocks there with good entry points after a little more selling so my theory is we need to get to those levels to bring back some good buyers and then move back up.  Just my take, certainly a tough one to call though.

I agree.  Sold more of my position and I am now about 55% in.  I can hold on until about 165.  If we drop below 192 I will start buying back in or if we go back up to 202.

The next two days will be critical in my view.  I have learned not to be greedy but book some profits while protecting my long term position.

CNBC just reported (via reuters I think) that Galleon has sold it’s aapl and goog position at “advantageous” prices. You can say it will take selling pressure away but those sales may have put us in a range where more selling pressure kicks in.

domsin - 27 October 2009 10:15 AM

Somebody is selling large volumes of AAPL.  Note on the intraday chart two big sales of 1.5 million shares which triggered the big drop in price.  Only 90 minutes into trading and volume is 13 million shares.  On an average day 16 million shares are traded.

Unless someone is willing to buy at a discount. “Hi, I’d like 3 million shares please, but I want them on sale.”

runedge - 27 October 2009 09:40 AM

Why the sudden sell?

To me, it looks like rotation followed by opportunists picking up the slack and now a slow and steady distribution.

From my point of view the half-baked tougher policy on “Too Big to Fail” increased market uncertainty because we don’t have enough details to properly assess the ramifications of the policy in relationship with the GSEs and C and BAC. Since everybody has been cautiously accumulating, the market reaction was to reassess my moving back to cash and further hedging long positions. In my mind this accounts for the forces that led to a market-wide sell-off which seemed to hit stocks trading over 200 harder than others.

Things are deteriorating in many places here.  2 year treasury auction was just strong but equities may take that as a negative in terms of cash is moving away from risk right now.  Nasdaq is losing it’s trend line and transports continue to fall harder.  Not being a bear just reporting the “news.”