The Dam Breaks in Apple

You want your shot at Apple (AAPL)? I know I do. Well, a bounce above $407.50 and I'm in -- but only for a scalp. I still don't think we've seen the bottom yet, but I think the stock is now finally getting close to fulfilling several bearish patterns. Remember that the completion of a bearish pattern does not signal a bounce, but it may signal some relief from selling. For myself, the two target areas floating out there -- once we saw a break of $420 -- have been $400 and $370. I haven't made a secret of these targets, but I also haven't curried any favor by putting them out there.

Apple (AAPL) -- Daily Source: StockCharts.com View Chart » View in New Window »

Today, Apple triggered the bearish cup-and-handle pattern that's been threatening the bulls and any bounce in store. The dam broke this morning, and sellers came rushing in. Although the stock did not hit $400, it is certainly close enough to have my attention for a scalp or swing long. But I won't be looking for a longer-term play until I see the $370 area, at which time I'll be looking at some risk reversals. My thesis there would be to sell out-of-the-money puts and get long call spreads with the $330 area as my short-puts idea -- but I will need to see the pricing at the time in order to determine a final trade....123 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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