Apple's Momentum Shift In The Wrong Direction, But Temporary

| About: Apple Inc. (AAPL)

Everyone who got excited about Apple’s (AAPL) robust iPhone 4S sales cannot help but be disappointed with Apple’s earning miss tonight. I’m one of them, as I recently pointed to a positive momentum shift for the company’s stock after the blockbuster response to the new iPhone. Perhaps the phone was released too late to boost the company’s bottom-line enough to beat analysts’ estimates. The problem, however, is that analysts knew this all along, but they didn’t adjust their profit estimates. That’s why the stock took a big beating in after-hours trading—down 7 percent. This means that Apple’s momentum is shifting in the wrong direction again. But is this momentum shift temporary or permanent? What should investors do?

The answer to the first question is simple and straightforward: This momentum shift is temporary, as the company commands solid fundamentals; and competition -- from Nokia (NOK) to Research in Motion (RIMM) to Hewlett-Packard (HPQ) -- that has tried to challenge Apple has been trashed.

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The answer to the second question is complicated, however, as it hinges to the answers to a host other questions: is the iPhone 4S significantly different than its predecessor? Is the surge of iPhone 4S sales genuine or just the result of hype for the last device that Steve Jobs touched? Will Apple continue to come up with blockbuster products without Steve Jobs?

It is hard to say. What we can say, however, is that conservative investors may want to stay on the sidelines until there is a better visibility regarding these issues-remember markets are unforgiving for high flyers.

Disclosure: I am long AAPL.

Additional disclosure: Active trader, may switch positions at any time.