AAPL Update!

Apple's stock has hit our watch target at $485 this morning and now we will look for some price firming to initiate a position.

The negative news is swirling, CNBC is freaking out, everyone is talking about how Apple is failing and expectations are coming down fast. The $500 price level is very important to me because that symbolizes a major psychological level for traders and investors. There are a lot of people that bought at $500 and now that the price has decisively broken below, those trades will be looking to cut their losses short and sell.

What we are looking for here is what is called a "capitulation" moment. This sort of sentiment indicator can mark a significant bottom for a stock. Capitulation means that essentially everyone that is going to sell has done so; we will notice the "moment" with a spike in the daily volume (total number of shares traded in the day). We will be looking to see above average volume on a down day for the stock. Today I am hoping we will see it. The break of $500 should create a flush of sellers, leaving only buyers looking for a bargain remaining.

The other thing I am noticing with AAPL is that momentum is still pointing in a positive direction while price has been dropping. Remember that when momentum is showing strength and price is showing weakness, it can be a signal that strength is building under the surface.

  
We are close here folks. What we will ultimately need to see here is for price to hold the $480 level and stay within the long-term yellow trend support. If price stays above the support, we will be buyers once price then breaks back above the key support turned resistance @ $500 and breaks the intermediate down trend resistance line (long white line). This would signal that price has found a bottom and is looking to reverse course.