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Zach Bass (a.k.a Ernie Varitimos) is Chief Bloviator of Investor in the Wilderness. He has 30 years experience as a Tech Maven, Investor and Consultant. Zach has been using Macs since their introduction in 1984, and investing in the markets just as long. His mission is to help guide all level of investors through the Apple Ecosphere and make sense of the markets. Zach's take on Apple, the markets, and life pursuits, will keep your mind tuned.

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Apple Price Manipulation, but Who and Why?

July 16th, 2008 • Related • Filed Under

Today’s price action on AAPL has many investors wondering what’s going on? You have a downgrade of RIMM, broad support across the market in today’s advance on all indices, yet AAPL is lagging. You have RIMM up 3% and AAPL up only .73% on equal volume at the time of this post of 15 million shares traded each. AAPL is the only one of the Four Horsemen of Technology (AAPL, RIMM 3%, GOOG 2.6%, and BIDU 4.2%) that is lagging, the others are taking off. Even Amazon is up over 7%!

How can this be?? Especially coming off of what was arguably the biggest release of an electronic product in history! This is so far off the norm it has to make one question the validity of the markets.

I’ve also noted that buyers outnumber sellers by a wide margin, yet prices are being held to the 170.50 level. It appears that some number of sellers are desperately holding on to that level. Could it be shorts covering, or big money holding the price down prior to earnings. In any case, it’s clear that there are forces outside normal market forces keeping AAPL down.

Check out these charts, and you tell me what the hell is going on?

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marketsurfer99 5 months ago 1 point
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it's very frustrating and makes trading AAPL difficult.

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kylelong100 5 months ago 1 point
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there could be some other reasons for this. the big money maybe thinking that the profit margins for aapl is declining. The iphone will not be added to the coming quarter earnings. Apple generally does not need to decrease prices for its products but it is clearly doing that for all sectors of its business, especially for ipods and iphone. Iphone is understandable since there is so much competition and competition is increasing. I still think iphone will be a major winner in the future but in the short term, with the earnings and the uncertainty of the bear market, we may have to wait till after earnings to think about buying.

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Yev 5 months ago 1 point
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Kylelong, can you show me where Apple is decreasing its prices? If you are talking about the iPhone, ATT is subsidizing the device and cost to Apple to build 3G iPhone is less then it was for the original iPhone.

What exact competition are you talking about at this point? There are lines out the door in all countries, where are the lines for these so called competitors.

Everything you are saying is unfounded and baseless FUD. Back it up !!!

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Thom 5 months ago 1 point
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Tranqillo YEV, tranqillo. He's expresing his concerns, not bashing. Apple's Back-To-School program is a pretty deep discount for the entire iPod line-up. The 3G will be a part of Apple's FLS but the Market can overreact.

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Thom 5 months ago 1 point
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Do you think then that this is a good entry point? If the Institutionals are keeping the price down for earnings is this foreshadowing an upside surprise (more so than the whisper number of $1.12) or setting us up for a fall?

Don't for get that Rimm trades 18mil per day usually so it's actually having heavy volume, while Apple trades 31-32mil so today's volume is anemic.

I really chalk this up to Margin concerns, Intel is only up +- 1% today.

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kylelong100 5 months ago 1 point
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I am long on aapl and short on rimm. but for the short term, with earnings coming up, it is safer to buy more after earnings. Macbook air, ipods, iphones have all cut prices. It is a good way to gain market share but investors may not like that at this point. I think down the future, when market shares really go grow, then it is safer to add shares of aapl.

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Thom 5 months ago 1 point
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I agree, my question was more of a general question. I'm holding very lightly into earnings and plan to take advantage of any temporary weakness that may occur due to mis-reading the tea leaves.

However, if oil falls tomorrow all bets are off and I feel ALL players will benefit (except the oil guys that is).

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Adam 5 months ago 1 point
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I am also disturbed by this, but compare AAPL to HPQ -- in lockstep.

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kylelong100 5 months ago 1 point
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in terms of competition, they are fall behind at this point in terms of iphone. but verizon is adding more subsidies to phone makers to compete with ATT. I have no doubt iphone is far more better in software, but investors do not get too passionate and will wait for pure earnings and profit margins numbers before considering long lines outthere waiting.

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ted 5 months ago 1 point
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Good article, but what exactly do you mean? What "forces" are there that hold this down? Is this a mysterious wall street issue that everyone just sort of knows about? Can you write more definitively about this?

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Trex 5 months ago 1 point
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options expiration on friday. Total of 175,000 contracts from 170 to 180?

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Bob 5 months ago 1 point
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I saw an article that ran some numbers and suggested AAPL could guide conservatively.
Can't find it right now, but if I come across it I'll post it. Perhaps that explains it?

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Bob 5 months ago 1 point
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Here it is:

http://blogs.barrons.com/techtraderdaily/2008/0...

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win 5 months ago 1 point
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Lots of shorts getting squeezed today -- in RIMM, BIDU etc. GOOG reports tomorrow. AAPL just didn't have any shorts. Who would have the balls to short AAPL through the launch of I Phone 3G? Stock will consolidate tomorrow. Friday depends upon GOOG earnings.

Also, despite all the FUD, Barron's still has cred. Remember when they pushed AAPL down ahead of 3 G by posting an article saying that "trustworthy sources" had revealed that Apple didn't have enough I Phones? Yesterday, they put out another rumor saying that AAPL was going to guide down. Very smart rumors - AAPL did guide down a quarter ago (and look what happened), so it does foster fear. I don't know why Barron's is spreading these rumors but if they are wrong about this one (and I think they are) I will be really disappointed.

Sad for me, I made a ST bet on a jump today (July calls). Oh well.

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kylelong100 5 months ago 1 point
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i really like win's explanation why aapl did not go up as much today: because of lack of short covering. I did cover my rimm short today. fortunately at 104. Later i shorted it again at 109. So, if your theory is correct, rimm likely will drop in price tomorrow and aapl will not drop as much. I hope you are right.

i found the barron's article to be an important topic. It is difficult to predict what apple will guide for september, it makes more since why the stock has not gone up with 1 million iphone sold. the iphone revenue will be spread over 2 years apparently.

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Elizabeth Kagan 5 months ago 1 point
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I'll tell you what i think (and, perhaps, know) If one reads the Apple message board, there are the SAME group of people shorting" apple stock EVERY SINGLE DAY! Now, I don't know whether or not it is being done legally, but in my estimation, for what it is worth, THAT is what is holding Apple back from any kind of good run-up. THAT is what is holding back any type of run-up in apple's stock,., At least that is MY opinion, for whatever it is worth and it makes me sick!

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Conspiracy Theodoro 5 months ago 1 point
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Because Big Money know SJ is going to die soon. How does Big Money know? Because they are having him killed. SJ is disrupting too many industries, and won't play ball with government agencies to provide back doors into private lives. Threat to the Big Brother status quo.

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Jim 5 months ago 1 point
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I watched the stock action today...July 18th on 5 minute candles...everytime the S&P 500 made a move...Apple reflected it...any review of the stock shows this however...I also included On Balance Volume and Accumulation/Distribution...the former was more conclusive but what I saw...was everytime the price hit 166.80...a huge sell would occur without exception...this would drive the price down and the buy would begin reducing the negative volume...and when it reached approximately the same value it would do it again...and then most amazing and what lends credence to the other article on this site concerning "Max Pain" and option pinning...the price went right down to 165 right at the bell...It dropped at the end of the :50 bar and then immediately dropped at :55 it was amazing to watch...frustrating because had I known the action was due to the option pinning I would have waited to purchase today...

Anyway...there is someone either making sure their option investment paid off...pick your investment bank/hedge fund...but I watch this happen day after day...including outlying buys and sells to leverage the price action...I even saw a closing price for Apple yesterday at 8:01PM that was significantly lower than the close price of the last legal bar...

Anyway...the question is not if but who...

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