AAPL’s April 2012 Sell Off

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    Posted: 21 April 2012 09:28 PM #31

    lovemyipad - 21 April 2012 11:48 PM

    Al, I concur, substituting “Evil Overlords” for “Big Boys.” wink

    You say tomato, I say tomaaato…. :wink:

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    Posted: 21 April 2012 10:52 PM #32

    Red Shirted Ensign - 21 April 2012 10:37 PM

    Big Al,

    Your theory is perfectly plausible.  The Big Boys prefer to buy shares as cheaply as possible prior to events that they believe will result in added intrinsic value to a stock.  Believe me, growing earnings 90% would be such an event.

    But how to acquire those shares as cheaply as possible?  Direct manipulation is one way, and we know it happens.  Indirect manipulation (FUD) is another, and a third is using tools available more to them than to us…at least in size. This would be leverage, inside (but not illegal) information and concerted action.

    We have seen all this before. We will see it again many times.  We need to constantly examine the fundamental story so as to be comfortable with our models, then prepare to withstand the power of TA when the Big Boys go to work.

    In my daydreams I see myself inside their heads, knowing in advance where they are taking the market… me, riding their coattails to riches…  then I wake up and my account balance shows I was fooled again.

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    Study the natural order of things and work with it rather than against it…  ? Tao Te Ching

         
  • Posted: 21 April 2012 11:16 PM #33

    Big Al, you want conspiracy theories?  First let’s say that I’m a hedge fund manager with a couple $B to work with.  Now a very smart way to make some income is to sell some calls for April 2012 back in January 2012.  The share price is about $400, so I feel pretty safe in selling April calls at $550.  So I sell 1000 contracts at $10 and rake in $1M.  Very cool!  There’s no chance AAPL will be at $550 on April 20, 2012, right?  I mean, look at the history of the stock.

    OK, so it’s April 10th and AAPL is now at $640.  Holy crap!  I might have to buy 100,000 shares of AAPL at $640 to fill those $550 contracts.  I’m looking at a loss of $9M, net $8M!!!  What can I do?

    I’m not stupid.  I talk to my fund manager friends who are in the same boat, and we start some programmed selling designed to drive the price down.  I talk to my analyst friends and tell them I need some negative stories and downgrades on AAPL.  I make sure those negative stories and downgrades are touted on CNBC and other high visibility media.  Watch the video of Cramer admitting he’s done EXACTLY this and tell me you think this is not what happened.  We are now at about $570 share price on AAPL.  Max Pain, the share price at which the options sellers lose the least money was $560 last time I looked.  Coincidence?  How many times does this have to happen before it’s not a coincidence any more?

         
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    Posted: 22 April 2012 04:52 AM #34

    Zeke - 22 April 2012 02:16 AM

    Big Al, you want conspiracy theories?  First let’s say that I’m a hedge fund manager with a couple $B to work with.  Now a very smart way to make some income is to sell some calls for April 2012 back in January 2012.  The share price is about $400, so I feel pretty safe in selling April calls at $550.  So I sell 1000 contracts at $10 and rake in $1M.  Very cool!  There’s no chance AAPL will be at $550 on April 20, 2012, right?  I mean, look at the history of the stock.

    OK, so it’s April 10th and AAPL is now at $640.  Holy crap!  I might have to buy 100,000 shares of AAPL at $640 to fill those $550 contracts.  I’m looking at a loss of $9M, net $8M!!!  What can I do?

    I’m not stupid.  I talk to my fund manager friends who are in the same boat, and we start some programmed selling designed to drive the price down.  I talk to my analyst friends and tell them I need some negative stories and downgrades on AAPL.  I make sure those negative stories and downgrades are touted on CNBC and other high visibility media.  Watch the video of Cramer admitting he’s done EXACTLY this and tell me you think this is not what happened.  We are now at about $570 share price on AAPL.  Max Pain, the share price at which the options sellers lose the least money was $560 last time I looked.  Coincidence?  How many times does this have to happen before it’s not a coincidence any more?

    You hit the nail on the head!! Amazing how those April options tanked and then tanked again with this ensuing sell pressure.  Ah, the EO. 

    Tonight I finally came to the same conclusion.  This is indeed what caused the stupendous drop in AAPL over the last 10 days.  It’s the EO and those damn profitable April options. 

    NOTE:  two weeks from July expiration, rinse and repeat!  Now…upward and onward to 700!!  AAPL will beat easily….even if the rest of the market falls apart.

         
  • Posted: 22 April 2012 04:56 AM #35

    On a technical basis, a 10% give back on a stock that’s increased around 70% this year is pretty normal. Once the overbought condition is reached , the market will look for catalysts for profit taking.

    It could be DOJ, Euro debt, uncertainty due to earnings report ... doesn’t matter. The point is that an excuse will be found. No doubt the magnitude of the correction is due to HFT piling on. Pinning for OE also plays a part.

    I’m not seeing anything out of the ordinary. So yes, market driven.