Relative strength measured by ratio analysis on one minute charts provides a surprising level of detail about the Flash Crash that cannot otherwise be interpreted. I believe that this innovative use of ratio analysis is critical to understanding the compressed events of the Flash Crash.

Here is a chart of the NASDAQ-100 index, AAPL, and the relative strength (ratio analysis) of Apple to the NASDAQ-100 on a one minute chart in the moments leading up to, and during, the Flash Crash.  What ratio analysis shows is that at 2:44 pm on May 6th, 2010, AAPL spiked down hard relative to the Index itself.  In other words, Apple was MUCH WEAKER than the index during the Flash Crash, or conversely, much stronger to the downside than the index.

In Was the Flash Crash Apple’s Fault I showed that the NASDAQ-100 was the weakest link during the Flash Crash and that Apple represents 20% of the weighting of the NASDAQ-100.  Adding this chart to the evidence I presented in that article, it is not a stretch to logically interpret that Apple pulled the index down with it, rather than vice versa. 

1 Minute Chart

1 Minute Chart

Right Click on chart {view image} to enlarge

I believe that the cumulative evidence presented here and in my previous article clearly shows that Apple is relevant to the cause of the Flash Crash.