Apple (AAPL) comes out with earnings tomorrow (Tuesday) after the closing bell, and we have to figure that the results will be stellar. That said, AAPL technically is set up for a potential sell-the-news event in the aftermath of its results.

AAPL is extremely overbought atop its near-vertical advance off its October 4 low of 354.24, and in the aftermath of Steve Jobs' death on October 5.

That said, it has not (yet) violated significant support, which keeps its dominant uptrend very much intact. To confirm that AAPL has established a near-term rally peak, the price structure must violate this morning's pullback low at 419.77, which should trigger "trader liquidation" that presses AAPL towards 410-405 thereafter.

As of this moment, only anecdotal evidence of a developing major 4-hour negative momentum divergence is warning us that near-term AAPL upside might be extremely limited, and that risks are shifting from the sellers to the buyers.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.