Fourth, this earnings miss was the first since 2004 and the subsequent stock dip will set up an important entry position. Because Apple fundamentals remain intact, this stock will bounce. We will wait patiently for the full opportunity to present itself at which time we plan on raising our AAPL allocations back up to 70% of the portfolio.

The holiday quarter will exceed expectations in the same way as the July report. How low will the stock fall? Apple has shown strong resistance at the $370 level but has occasionally dropped into the $350's intraday. Both of those price points should be viewed as buying opportunities.

In the grand scheme of things Apple grew iPad sales by 166% year over year and we expect iPhone sales will grow by 100% in the holiday quarter. Even the notoriously conservative Apple guided above street estimates to revenue of $37 billion and EPS of $9.30 in the next quarter. This company is humming and its stock remains the best investment vehicle on Wall Street. We're back in buy mode.
At the time of publication, Jason Schwarz was long Apple.

Jason Schwarz is an option strategist for Lone Peak Asset Management in Westlake Village, Calif. He is also the founder of the popular investment newsletter available at www.economictiming.com. Over the past few years, Schwarz has gained acclaim for his market calls on the price of oil, Bank of America, Apple, E*Trade, and his precision investing in S&P 500 option LEAPS. His book, The Alpha Hunter, is set to be released by McGraw Hill in December 2009.

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