Market Structure Consultant Dennis Dick On Decline in Apple: 'Significant Increase In Selling Pressure Leads To Mini Flash Crash Events'

Speaking to Benzinga, CFA and Market Structure Consultant Dennis Dick, commenting on the action in Apple AAPL Monday morning, pointed out most liquidity in the stock market is provided by high frequency traders -- market players which have very low profit margins. Because the high frequency traders are risk averse, Dick explained they withdraw quotes to protect themselves when risk rises. “This can lead to a lack of liquidity and increased volatility during periods of market stress,” according to Dick. But Dick warned he wouldn't pin this morning's Apple Inc. AAPL mini flash crash all on high frequency traders. “I pin it on the fact that we are too dependent on high frequency traders for liquidity and their quotes are unstable,” he said. “So the problem is a lack of other types of participants providing liquidity.”