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TheStreet Open House

5 Trades to Take After the "Obama Crash"

Apple

First up is $524 billion tech behemoth Apple (AAPL). This huge stock has been pulling back hard over the past couple of months, giving back 20% of its price as anxiety ramped up over whether the firm could justify a $700 (or even $600) price tag. But the selloff could be coming to an end -- here's what to look for.

Apple's trouble started up around the $660 level, when the stock triggered a head and shoulders top. Traders who shorted there had the chance to grab the lion's share of the move down. But even though Apple's drop has been big, it's only taken shares through one weak support level on the way down. That's important -- it means that the selloff has been "easy" rather than a meaningful exit from Apple spurred on by conviction selling. In other words, the stock has dropped because it moved through a range where there haven't been any buyers to begin with.

But there are buyers nearby. There are buyers right around the $558 level where shares closed yesterday, in fact -- it's a price that's acted as a floor for AAPL several times in the past, so it's a spot where Apple's drop could very well end when buyers start thinking that this Wall Street darling looks cheap again.

That said, I'd recommend very strongly against trying to catch the bottom in Apple; support levels do fail, and when they do, you don't want to be left holding the bag. Instead, wait for a bounce off of S1 -- the bounce lets us verify that those buyers are still hanging out at $558 before putting cash in the trade. We'll probably see that bounce today.

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