On Wednesday, Apple (AAPL) stock fell $37.05 or 6.43%.  In after-hours the stock continued to fall and it was down as low as $518 this morning.   Yesterday Apple suffered its largest one-day loss in four years.

There are a variety of explanations for the tumble offered by talking heads, ranging from a research report to a technical death cross.  The real reason was forced selling based on margin calls.  There is strong anecdotal evidence that a large number of buyers near the recent swing high in the zone of $570 to $590 were short-term speculators buying on margin.

A small firm, COR Clearing, raised margin requirements on Apple from 30% to 60%.  There were rumors all day long about other firms also potentially raising margin requirements on Apple.

My systems at The Arora Report monitor every tick of Apple stock trading; dissect this data and feed the data into complex algorithms that attempt to decipher reasons behind the trades.  These algorithms are based on a ton of historical data and trading patterns related to a variety of trading scenarios such as forced selling and short squeezes, as well as actions of smart money and actions of the momentum crowd.

In an over-owned stock like Apple, selling almost begets more selling.  As the stock fell, market technicians started fretting about a death cross.  A death cross occurs when the simple 50-day moving average crosses below the 200-day moving average.  In traditional technical analysis this is considered a negative signal.   My testing shows that this signal is this is backward-looking and not very useful, but since a large number of people believe it, they act on it resulting in a self-fulfilling prophecy…Read more at Forbes

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