Apple Getting a Double Push Upward

NEW YORK (TheStreet) -- What's happened to Apple (AAPL) over the last two trading days is significant.

Apple announced a Sept. 10 event at the opportune time to thwart technical weakness related to a post-dividend selloff.

Because of this product announcement leak to All Things D and USA Today, August is tracking much better than the May dividend precedent and a snowball effect is occurring on the heels of a strong post-earnings rally.

When a stock surges against the odds of expected technical weakness, it sends a strong signal to traders that a breakout is under way. Under typical circumstances of the last 10 months, Apple was expected to drop to 430 this week.

Instead, the stock was up 13 on Monday and is up 7 on Tuesday. The August run to $500 is tracking ahead of schedule.

In the Wild West of the blogosphere, it can be difficult to identify which news is market-moving and which news is irrelevant. For Apple, only two fundamental news items matter. The first is nicely summed up by AppleInsider in an article titled "Low-Cost iPhone Predicted to Boost Both Apple's Margins & International Sales."

We heard this same analysis from Morgan Stanley's Katy Huberty three months ago; now we're hearing it from ISI's Brian Marshall.

Marshall speculates that the new iPhone 5C will have 40% margins, which compare favorably to the June quarter tally of an overall gross margin of 36.9%. He believes the 5C will prove crucial to Apple as it improves overall margins and drives market share gains.

China Mobile has 740 million subscribers and Japan's NTT DoCoMo has 62 million subscribers, and neither carrier currently offers the iPhone. That should change with the 5C.

What is Marshall's price target on Apple?

Same as ours: $600.

The next time someone tries to tell you that the iPhone 5C is bad for Apple, just tell them to look at the stock action from September 2012 to September 2013, when Apple wasn't offering the 5C. Obviously Wall Street wants a low-cost option in the iPhone family.

The second thing Apple shareholders should pay attention to is any news related to the fingerprint iPhone 5S.

It's our opinion that nobody in the media is accurately analyzing the real upside of this device. The negative Apple sentiment of the last 10 months has suffocated the reality that this new phone represents the greatest smartphone innovation since 2007.

To anyone who says otherwise I would simply ask, have you used your smartphone as a wallet replacement?

Have you gotten rid of your credit cards?

Do you still carry a hard-copy drivers license?

Have you ever used your smartphone as a key to unlock your front door?

If the answer is no, then you have no business telling me that the iPhone 5S lacks innovation. Enhancing daily habits is the very definition of innovation.

Beyond increased functionality, the innovation in fraud protection has the potential to be something we've never seen before. At least 27% of credit card holders have experienced fraud in the last five years. In the U.S. and Mexico survey, results showed 44% and 42% of credit/debit card users have experienced card fraud.

Apple's Authentec fingerprint security is poised to become the best in the mobile payment industry; a definite reason for consumers to upgrade.

Sometimes it's more important to watch what Wall Street does rather than hear what Wall Street says. Apple headlines remain negatively biased, but the stock action is on fire.

The action of Monday and Tuesday is loud and clear:

It's time to be in Apple.

At the time of publication, the author was long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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 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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