As the technology sector and Apple continue to drop, MoneyShow’s Tom Aspray points out the seasonal and technical patterns that suggest investors should be looking to buy, not sell.

Stocks gave up most of their early gains on Thursday, which for the short term makes Friday’s close more important. The market internals were stronger than prices: on the NYSE, 63% of stocks advanced and only 32% declined.

The Nasdaq-100 has borne the brunt of the selling since the September highs, as it has declined 5.5%, versus just a 3.4% decline for the Spyder Trust (SPY). The Nasdaq-100 had outperformed the SPY since the June lows.

Of course, Apple (AAPL)—which makes up close to 20% of the technology heavy Nasdaq-100—has dropped even further. From the September highs, AAPL is down 11.6%...but one must remember that from the May lows to the recent highs, it had gained over 35%.

The bearish sentiment on AAPL is increasing, but those on the short side should be aware of Apple’s 30-year seasonal tendency to bottom in October. Does anyone really think Apple products won’t be on the top of most holiday buy lists?

Knowing this, is the recent correction unusual? In 2010 and 2011, AAPL corrected 15.8% and 14.8% respectively from its highs, before resuming its uptrend to close the year near its highs. Identifying key support for AAPL and the tech sector will allow investors to develop a sound buying strategy for this correction.

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Chart Analysis: The Select Sector SPDR Technology (XLK) peaked at $31.74 in September, and has now corrected 5.7% from the highs. It is testing the 20-week EMA.

  • The minor 50% Fibonacci retracement support is at $29.50, with the weekly chart support at $29.30 (line a).

  • The rising 200-day MA is at $29, with further chart support in the $28.50 to $28.85 area.

  • The weekly relative performance or RS analysis did confirm the recent highs, but has now dropped below its WMA and the uptrend (line c).

  • The weekly on-balance volume is now just barely above its WMA, but is still below the longer-term downtrend (line d).

  • There is short-term resistance now around $30.50 to $31.

  • The daily studies are currently negative, but did not form any divergence at the September highs.

The weekly chart of Apple (AAPL) shows that it is also now testing its rising 20-week EMA, and is not far above its weekly Starc- band, which will be at $614.33 next week.

  • The July highs are at $619, with more important support at $570, which was the July low.

  • The relative performance did make new highs in September (line e), but has now dropped below its WMA.

  • The RS line is still above the summer lows.

  • The weekly on-balance volume (OBV) did make convincing new highs with prices, and is now testing its 21-week WMA.

  • The OBV broke through resistance (line g) in the middle of August, signaling the latest rally.

  • There is longer-term support for the OBV at the uptrend (line h).

  • There is weekly resistance now in the $645 to $660 area.

NEXT: A Closer Look at Apple's Charts

Tickers Mentioned: Tickers: XLK, SPY, AAPL