On Monday, US markets were up on solid retail sales and it seems as though it is going to be a no drama Monday, then you saw Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL). Google Inc (NASDAQ:GOOG) is currently down 14.55 or 2.36% to $609.72 as of this writing. Apple Inc. (NASDAQ:AAPL) fell below $600 for the first time since March. The stock is down 13.00 or 2.24% to $592.81. As you can see when the market is up slightly and your tech giants are falling over 2%, there is obviously a problem.
Google Inc (NASDAQ:GOOG) is falling because investors are still a little unsure of the founders’ grab for power away from shareholders. This threw off a lot of people, even regulators because it is very unusual to see founders of a company purposely create a system that would ensure they have the final say and not be under shareholder’s discrimination. This unorthodox method is making Wall Streget scratch their heads to see how they feel about these new stock splits.
Apple Inc. (NASDAQ:AAPL) on the other hand has been speculated to sell off recently after a few events in recent weeks have given investors the “lock in your gains” mentality. Apple hit an all time high of $644 last week and since then has fallen 9%. There are a few reasons for this drop but according to Dave Lutz, analyst at Stifel Nicolaus, there were rumors that Apple could be releasing an iPad mini at around $200 to help take market share away from Amazon and Barnes and Noble. Unfortunately, the rumor also speculated on the possibility of the iPad mini to “cannibalize sales”. Despite this, Dave Lutz believes there are other underlying factors that have contributed to the stock’s fall.
In addition, the Department of Justice’s action against Apple’s e book pricing model also gave investors a good scare last week. The DOJ accused Apple Inc. (NASDAQ:AAPL) of fixing the price of e books sold to be able to sell them at a higher price. Apple has denied the claims and said they will fight the charges.
The main reason Apple fell is due to behavioral finance. The stock had been down five straight days. This move down has shaken a lot of Apple Inc. (NASDAQ:AAPL) holders because of the possibility of a bigger sell off. As human beings we do not like losses, it has been said that investors are more worried about losses than gains. The fact that Apple fell five straight days after hitting another all time high is a sign that the stock has fallen into the behavioral finance parameters. Once someone starts selling, it builds until it is a full blown sell off. Keep an eye on these two tech companies for any signs of a reversal.
Disclosure: No positions