Apple Inc. (AAPL) Stock Manipulation Report

Apple Inc. (NASDAQ:AAPL) one the most manipulated stocks of 2012 continues the trend into 2013.

Most technicians would agree that when viewing a chart of Apple Inc. stock there appears to be some “irregularities,” during some periods of time. Questionable trading activity can be seen both on the downside and the upside. On September 19th, the stock closed at $702.10, and a little over 3-months later on December 28th the equity fell to $509.58. A drop of 27.4% occurred with little news from the company and without any shocking developments about earnings, guidance or new product line development.

About two months ago, Apple jumped over 7% in one trading session. After closing at $527.68 on November 16th, the stock closed the very next day at $565.73, – a dramatic increase of $38.00. Another example is from the period of July 25 to September 21, when shares of Apple soared 24% or $135 in just 42 trading sessions. That type of performance effectively means that the stock averaged an increase of just over $3.20 per trading session for forty two consecutive days.

Apple (AAPL) Stock ManipulationSome have argued that Apple’s stock performance leading up to the 2007 with the unveiling of the iPhone, made it a prime company for foment and manipulation. It is well-known that many media channels regurgitate the same misinformation in the market, which can easily cause a temporary panic-induced drop. Despite the news being completely untrue, someone can use these movements in the stock to profit handsomely.

Apple Inc. (NASDAQ:AAPL) is much easier to move compared to other companies with very little volatility such as Microsoft. Despite being in the same sector, Microsoft experienced a small difference in stock price since the 2000 bubble popped. More household names such as Procter & Gamble and Verizon are other examples of much more stable price movements.

These aforementioned companies simply do not have the type of ground breaking innovation that Apple is known for. They provide more stable products, and moving one of these stocks would be extremely difficult. In Apple’s case, an analyst or investor can simply say that they are hearing a rumor about “something” that “may” be happening in the near future. It could be based on complete speculation, but nevertheless will spur an initial move in the stock.

Investors who disregard the technical analysis and simply focus on the fundamentals may want to reevaluate their investment strategy. Technical analysis is a very important part of investing and the Apple (AAPL) chart supplies an abundance of useful information. When looking at the chart there were some movements that stuck out such as stacked buying for certain increments of time. When taking a closer look at intra-day moves and weekly options there seemed to be a constant occurring towards the end of trading, particularly some weird activity on Fridays.

On Fridays when weekly options are set to expire, many traders lose any potential gains as the equity value tends to move to get closer to the strike price for the week’s options. Lucky traders will be able to cash these securities in the money if given the chance and timed correctly, while others lose a substantial amount of principal. On these days there has been some erratic trading.

For example, on April 29th 2011, there was an extreme jump in trading in AAPL as more than 15 million shares changed hands and the stock dropped below the $350 strike price just before the closing bell (see chart below). The value of those calls disappeared almost instantaneously, while other puts were drastically put in the money. There are some that contend that fairly common hedging activity is the primary cause for the drifts in stock price. Other scientific reports have revealed that such stock price activity would not be accounted for by just hedging, and is thereby indicative of equity price manipulation, which by definition is illegal under United States securities law.

AAPL Manipulation

Apple Inc. (NASDAQ:AAPL)’s stock is vulnerable and can be easily moved due to its media exposure, popularity amongst all age demographics and the price of the stock. Most folks do not realize that the price of the stock is actually assisting in it being manipulated. Generally, a more expensive stock is more difficult to move due to how much capital it takes to do so. But with Apple, it’s different. About half of all trading in the stock generally takes place in very risky options that are set to expire at the end of the week. Apple stock option daily volume in weekly options was just over 90,000 contracts during the first three quarters of 2012.

Most investors want a piece of AAPL stock considering the current product line and the innovation that comes along with the name. Most retail investors cannot afford a $500 stock, or cannot buy enough shares to fill their appetite, so they turn to the options market. Most institutional investors are aware of this and are able to generate momentum in the stock, making it go significantly higher or lower. This allows the price to move quickly and trigger a lot of stops and scare day traders out of their position. Since options are so heavily traded with stop and limit orders, a select few are able to sway the stock and trigger these trades, causing abnormalities and spikes in the stock. It becomes what is known as a domino effect, and with Apple it is very easy to do.

The media has also tainted the credibility of the some of the equity movements in the stock. CNBC’s Jim Cramer was reported to have released an incorrect story following the iPhone’s launch that the company’s wireless partner Cingular, which was renamed AT&T at a later date) would supply a year and 6-months of free mobile service for the iPhone. The story was deemed completely false but was already picked up by blogs and widely publicized on various financial and syndicate sites like Digg. People began to question the report wondering why Cingular would give away $1440 of free service to at least ten million subscribers just to earn just $480 over two years. CNBC in general has been a basher of Apple Inc. (NASDAQ:AAPL), consistently pointing out how this may be the quarter when the company falters.

The Street’s Scott Moritz is also guilty of filing a very dubious report aimed at nailing Apple’s stock. The reported harped on the idea that Apple’s great launch weekend was a bust since the company was expecting to ship 1 million products within a few days, citing unanimous “whisper” sources. This story was deemed incorrect as the company does not release whisper numbers. The disbelief of the constant success and outperformance of the company has much of the media skeptical, especially folks at CNBC, who are always looking to poke holes in one of the most amazing corporate stories of a generation.

It appears that Apple Inc. (NASDAQ:AAPL) stock will continue to be manipulated until there are firm consequences put in place to stop people from driving the security up or down. Apple is a unique company and its stock carries a lot of euphoria that can be controlled with timely buying and momentum swings. These tactics in the end almost always benefit the large institutions and hurt the small retail investor.

Update 1/14/13 (4:54pm EST): Adding a link to an article today about Apple manipulation.

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Disclosure: None

  • Has your website now been completely scrubbed from Google Finance?

    • No Jon why do you ask? This article didn’t last long on Google Finance but there are a lot of algorithm variables that come into play in regards to that.

      • I wondered whether Google was actively scrubbing you out of the results after your Google Finance AAPL-sell expose.

        • Gotcha. After a couple email exchanges with Jason from Google he said the article was not manually removed from Google News. I haven’t experienced that again so maybe it was a fluke.

          • Rich P.

            Any way to send your article to Melissa Lee and Jim Cramer?

            • I assume the networks they work for have email address that forward to them. It shouldn’t be to hard to track them down online. I’m really busy today Rich but if want to give it shot it can’t hurt to try.

        • You would think it would be the opposite… If I were Eric, I would put this on the homepage of Google with a link to an Android phone ;-)

          • I think that is a great idea but Eric before you do that let me know so I can beef up my server :)

  • David S. Matrecano

    Even if it’s turning very difficult to resist to this strong bleeding in Apple stocks, I totally agree with everything the friend Sacto_Joe states here today.

    In the short run, for some kind of bad press, bad analyst, bad big sharks or bad hedge fund managers, it’s not difficult, while working together in a joint evil coalition, to create APOCALYPTICAL scenarios who spreads waves of panic and fears in the body of the average AAPL investors…

    Now, I am very sorry to say what i am going to say and I also know that I can attract upon myself hundreds or thousands of negatives but, here, we are basically speaking about the average intelligence of the average investor.

    I explain:
    1) If somebody came out with an aggressive press campaign in 2007 (when Apple launched the original iPhone), whispering daily in my ears that the new Apple device was just a mere piece of crap, that Apple would sell in the entire year 2007 just, say, 100.000 devices, that the market wasn’t then ready for the lack of a physical keyboard, that Black Berry dominates the market etc etc.

    And even if a lot of my friends and relatives during 2007 had already bought the iPhone and were telling me wonders of the new device, I see the AAPL shares dipping in the dark so, I’ll probably end up believing that bad press and they have achieved the goal of deeply scaring me leading me to sold off all of my Apple shares…

    …Just to, obviously, seeing a few weeks later, when Apple announces quarter record earnings, a very strong upside in the shares that I had just threw in the garbage… Now, at the end of 2007, I look myself in the mirror and I feel like an idiot…

    2) then, in 2008, the same people of the 2007 press campaign tried to play the same game with me… this year is obviously different because the “idiotic experience” of the previous year had start to rise in me some credibility questions about all those analyst and managers, especially considering that now, it seems that the new iPhone 3G sold two times faster than the original iPhone… And this year, my wife bought me one iPhone for my birthday so, now, I have a personal experience of what an iPhone really is… But once again I see the shares dipping in the dark and… let’s say that once again my fears and the bad press overtook my logic (who scream to me to be brave this time) and I sold off again my shares just to see a few months later another huge run on the upside when numbers are revealed.

    For the second time in a row, I look again myself in a mirror and guess what?? I feel like an idiot but this time not just a plain idiot but a square or cubic idiot…

    3) 2009 has come and the same people of 2007 and 2008 are trying to play the same game but now, they absolutely won’t catch me again with the trousers down… Being an idiot two times in a row has been enough for me.. Now i’ll keep my AAPL shares until my dead even if I see that a lot of other average investors like me are being once again convinced to throw in the garbage bin them stocks…

    4) 2010 – History repeating: Wash, Rinse, Repeat.. But this time, having jealously kept my AAPL’s, I am a little bit more wealthy than previous year and I don’t feel so idiot. Now I am start thinking that the idiot is my cousin Jerry (and thousand of others) who, once again, following the press campaign of same gang of ’07,’08,’09 and 2010, have precipitously sold off the AAPL shares that I suggested him to buy in the beginning of 2010..

    5) 2011 – History repeat itself: Wash, Rinse, Repeat.. I am now much more wealthy and happy than I was 2009 and 2010. Thanks to Apple for the gift that gives to me but, guess what?? Yes, you’re right, the same Press campaign people is still acting in 2011 and the same “average investors” are religiously throwing them AAPL shares in the water closet…

    6) 2012 – History again repeat itself: Wash again, Rinse Again, Repeat Again… Now I have nearly three times the money I had invested in AAPL in 2009 but still I can see the same old friends of the “Press Campaign” spreading fear and the same old “average investors” following those fears like a herd of sheeps…

    7) 2013 – same as above but this time, I am seriously start having strong doubts about the mental faculties of many of us. If it is so easy for us “average investors” to be constantly manipulated by a bunch of such a shameless people who get always more and more rich when we always lose our money, maybe, we don’t deserve to be called smart people..

    There is old adage here in Europe that says: “A stupid and his money will not remain together for a long time…”

  • GeneralmotorsGravytrain

    As long as the hedge funds rule Wall Street, long-term Apple shareholders will end up totally screwed. The hedge funds are playing the stock market like a casino where company fundamentals count for almost nothing. It’s always about where Apple is going to be 36 months from now and how they already see Apple losing market share to Android.

    The Apple believers continue to talk about the spring compressing and suddenly expanding and the pulling back of the Apple slingshot, but that’s just their way easing their own financial pains as their money gets sucked away. There’s no guarantee that Apple will ever rise again. The hedge funds can destroy any company they want by tacit agreement. All the smart guys are putting their hopes into Amazon and Netflix because they’re fundamentally weak but make good longshots to make quick money. Since when does a company with a P/E of 3600 make a good long-term investment? Value will out in the end? BS. That’s like saying good triumphs over evil. There’s no proof in that.

    Meanwhile, the media circus is dumping all over Apple. It’s always Android this and Samsung that, slicing Apple into little pieces. Apple is fundamentally sound, making money and yet the media circus would have you believe that Apple is collapsing because it doesn’t make 4.8″ display smartphones. I know Apple is making money, but that doesn’t mean shareholders will ever see a penny of it. The stock market doesn’t belong to the little guy. Only the big boys benefit from it. I feel certain Apple will have a decent quarter, but Wall Street is going to be disappointed because Apple didn’t sell twice as many products as the analysts expected in a poor economy. Apple shareholders will be lucky if the stock doesn’t tank further. Apple is heading for a P/E of 10. Say hello to Dell for me.
    To Apple shareholders: Keep waiting for your reward… in heaven.

    • David S. Matrecano

      Bitter words that (at least today) seems to be bitter true!!

      Only one thing we can do to see if your words are once again becoming true is to wait until AAPL earnings release and guidance in january 23…

      Jan the 23rd is just 15 days from now… So i will not sold off my shares until then but I will resist as I am doing so since 2009.

  • Finally a sensible article that touches on the real factors hurting the stock. It’s deliberate manipulation by Wall St and media. But like they say, you can’t hold great ones down forever. I’m long on this stock.

  • ralphpetrillo

    Hedge duns are manipulating the trading, and every friday when opions expire the stock is moving in a crazy pattern. Buy straddles until this settles out. Apple has strong earnings, great cash pile of $ 140 billion, new products, no real reason for this wild volume

  • Sacto_Joe

    Wow. This story reads like a rap sheet! Good on you, Steven!

    I’d only add that this kind of stock manipulation (for short term gain) hurts a stock in the short run, but value will out in the end. I hold Apple for the long term (think years) and think of Apple’s compressing Price/Earnings ratio as a kind of long term value storage device, like compressing a spring that will eventually decompress.

    Also, pushing the stock price down below a fair value permits Apple, which has a huge cushion of cash, to buy stock back at a very low relative value. That in turn is hugely beneficial to the long term stockholder, who ends up with a less diluted share. In other words, it’s the options players themselves that are the ones getting hurt!

    Bottom line: there’s little the stock market can do to actually harm investors willing to wait for their reward, and absolutely nothing the stock market can do to affect the continued powerful growth of Apple’s money-printing machine.

    • Ken Kafieh

      How do we know when apple has bopught back shares? do we have to wait until earnings to find out?

      • Apple has a $10 billion stock repurchase plan which already started. With over $110 billion in cash they should repurchase much more than that in my opinion.

        • ralphpetrillo

          You are on target but thy have 140 billion now for another quarter has passed. They had 128 billion. I would argue that Apple should buy back 10% of their outstanding stock not with their cash but with a loan set at 3%. A $ 50 billion loan at 3% would increase expenses by 1. 5 billion a year, but the decline in shares would add 20% to the value of the stock.

  • shirleypartridge