Looks like fire blight which is a bacterial disease caused by Erwinia amylovora.. The whole area affected is called the canker and the bacteria would have overwintered and if I am correct you might be able to see moist areas as the bacteria are now growing (this is the biofilm and sugary matrix the bacteria to protect themselves and attract insect to disperse them). They can be dispersed by insects picking them up and spreading. Local temperature and humidity is very important since this facilitates growth. Other members of the Rosaceae family can become infected: Quince, crabapple, mountain ash, spirea, hawthorn, pyracantha, and cotoneaster are all susceptible

Varieties of apple affected are notably Gala, Jonathan, Yellow Transparent, Lodi, York and Wealthy

You need to focus on removing/stopping this or it will spread to the buds leaves and any other apple trees you have. You can use streptomycin sprays, copper sulphate and cultural control like pruning/removal. Not all cankers produce spores and ooze, but if they do there are millions of spores to be spread. Walking insects such as ants spread it over the tree (and to the buds). It can also be spread by rain and wind.

see here for a longer version of the details above http://www.caf.wvu.edu/kearneysville/...

I would say you next step is to see if it is oozing and measuring spread. And applying something to kill the bacteria. Notably "Fire blight is one of the most difficult diseases of apple to control, and there is no one procedure that will give complete control. Though control is not an easy task, the use of several practices in an integrated manner should result in minimal damage from fire blight" (Source http://ohioline.osu.edu/hyg-fact/3000...) That is not encouraging and especially as they say the best defense is resistant varieties.

Maybe I am wrong and it is not fire blight. Lets see what other say.

see also the APS page which has good images. http://www.apsnet.org/edcenter/introp...
And this video is very useful https://www.youtube.com/watch?v=96SCW...

My concern is that you have it on such a small tree. Usually it gets established on older trees and on branches. Having it on a young tree means it is likely doomed. What cultivar of apple is it? How many apple trees do you have?