2. Apple (AAPL)

I know, I know, Apple eh? The stock everyone loves soooo much! Well I don't love it that much, but its hard to ignore a company that has over $50 Billion in cash just waiting to develop the next "cool" product. The other thing that's hard to ignore is the fact that Apple's stock has lost nearly 1/3 of its value over the past  3 months. I am not a fan (at this point at least) of Apple's long-term stock growth, I feel that most of the goodness has come and gone. But that doesn't mean we can't squeeze a little more blood out of this turnip.

The Good:
The company is a monster. They make cool products that are easy to use and fun to play with. They have massive amounts of cash on their books and zero debt. The Iphone, Ipod, Ipad were all revolutionary media consumption products that many people love. Steve Jobs was a visionary, how far out into the future he planned is the only thing holding them back. Their stock hit an all-time high in September 2012 and has potentially created a nice entry point for new investors to get involved.

The Bad:
Well, if you are an Iphone user, the maps are first. The actual map function is not my concern; the concern is that up until the map breakdown, AAPL was more or less flawless. Nothing they made had bugs or glitches, the products were durable and reliable, and the vision of the company was impeccable. This level of perfection is not sustainable in my mind. What happens if more of these "mistakes" continue in the future? Next would obviously be the passing of Steve Jobs. He was the visionary behind the key Apple products,  can his predecessors continue this innovation? I don't believe you can make AAPL a $1,500 stock by simply kicking out an Iphone 12. They are going to need to continue to lead in their industry to maintain their already impossible stock trajectory.

All that being said, I am a trader and don't need AAPL to double from here; I would be fine with a couple hundred dollar gain. If it could retest its all-time highs, I can guarantee you we will make some coin.

The lines I have shown here indicate a new type of support line. The yellow line is called a "trend support". The purpose of a trend support line is that if price is moving higher steadily, it will continue to do so in a somewhat orderly manner. Typically a line drawn along continually higher lows will create a support effect when the price returns to the general trend. As you can see above, the price for AAPL has stayed elevated for some time and is just now coming back to its main trend support (this trend support actually extends to its low in 2008).

This is a significant sell-off and nothing materially has changed with the company. They still make great products and still have excellent financial stability. The primary reason for the large sell-off was due to the fear of higher tax rates because of the Fiscal Cliff nonsense. Many long term investors that had made significant gains in the stock sold before the new year to lock in their lower gains tax These are the buying opportunities we like to look for. Strong companies that have come down in price to provide us with a much cheaper entry point.

What we are watching for is to see price firm up a bit, we don't want to buy this thing in free-fall. However, now it appears that investors are beginning to accumulate the stock. This is another one of those "under the surface" indicators we look for near a potential turning point. We will get into how we analyze accumulation in a stock down the road. I think a perfect place to look for support would be at the trend line ~$500-495. If this continues lower to about $500-495 and holds up, I will be buying. The risk is least right at the trend support because if price doesn't hold there we will simply sell and lick our small wounds. You must be able to sell for small loses if your ideas don't play out. Under no circumstance can you let a stock get away from you. Selling for a $100 loss is much different than selling at a $1000 loss.