Apple Inc. (NASDAQ:AAPL) shares tumbled sharply on Monday leaving traders and experts speculating over the probable cause of the decline. Apple shares dropped on Monday, witnessing its largest price drop in at least three months on an unusual rise in volume, says a report from Reuters. The exact reason for the decline could not be established indicating that the institutions holding large stocks might have offloaded.
Institutions to be blamed?
Just before 9:51 a.m. EST yesterday, sell volume inflated with more than 6.7 million shares trading in a one-minute stretch, which is the heaviest minute for Apple Inc. (NASDAQ:AAPL) since October 29th according to the Thomson Reuters data. Shares of the company tumbled 3% in that minute, falling as much as 6.4% to $111.27. Apple shares closed down 3.25% at $115.07.
According to Steve Hammer, a trading educator and founder of HFT Alert in Santa Barbara, California, which monitors algorithmic trading, around 300 stocks were showing a higher price traffic beginning about 9:50 a.m. EST, suggesting that institutions are pursuing a sell program.
“When you see that kind of price action that is simply algos running stocks,” Hammer added. At 2.05 p.m. EST (1905 GMT) over 64 million of Apple Inc. (NASDAQ:AAPL) shares were trading, making the stock as the most active issue in the United States market.
There were speculations of automatic trading as there was price volatility along with high volume, suggesting High Frequency trading (HFT), notes Reuters. Computer algorithms are set to execute the trade at very fast pace.
Other reasons cited for Apple Inc.’s decline
Analyst at Morgan Stanley lowered Apple Inc. (NASDAQ:AAPL) weighting in their strategic portfolio to 3% from 4% in an equity outlook on Monday. However, according to the traders the movement in price and volume could be blamed to the note, which was released before trading session started. Expert noted that the Morgan Stanley note might have triggered the decline, but could not have caused such a decline.
Other stocks that exhibited decline on heavy volume is Alibaba Group Holdings, which dropped 1.4% on one minute. With nearly 1.5 million shares trading the S&P 500 tracking ETF had its busiest minute of trading on Monday at 9:51 a.m.