Apple tumbles as much as 6 percent in unusual trading

Mon Dec 1, 2014 2:27pm EST
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By Chuck Mikolajczak

NEW YORK (Reuters) - Apple Inc (AAPL.O: Quote) shares tumbled shortly after the start of trading on Monday, briefly suffering their largest price drop in at least three months on an unusual spike in volume.

Selling accelerated just before 9:51 a.m. EST (1451 GMT), with more than 6.7 million shares trading in a one-minute stretch, the heaviest minute of trading in Apple since Oct. 29, according to Thomson Reuters data.

The stock lost over 3 percent in that minute, falling as much as 6.4 percent to $111.27. At midafternoon, it was down 3 percent to $115.45.

The cause of the decline was not yet clear, though traders pointed to institutions using selling programs across a wide swath of stocks. Steve Hammer, a trading educator and founder of HFT Alert in Santa Barbara, California, which monitors algorithmic trading, said about 300 different stocks showed elevated price traffic beginning about 9:50 a.m. EST, a sign of institutions putting on sell programs.

"When you see that kind of price action that is simply algos running stocks," he said.

As of 2:05 p.m. EST (1905 GMT), more than 64 million Apple shares had traded, making it the most active issue in U.S. markets.

A sharp price move coupled with high volume often prompts speculation about the influence of high frequency trading (HFT), when computer algorithms are used to trade stocks at an extremely rapid pace. HFT has been criticized for affecting the trading of stocks by sending in numerous trade quotes that slow quote activity - without filling the trades when shares fall.

"What that is called is evaporation of liquidity, liquidity that was never there in the first place and it’s a typical maneuver that goes on in the fragmented stock market we have now," said Joseph Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.   Continued...

The Apple logo is lit in Sydney September 19, 2014. REUTERS/David Gray