The Mechanics of Apple's Next Slingshot

Tickers in this article: AAPL GOOG

NEW YORK (TheStreet) -- Apple's summer/fall action is revealing itself.

The pre-earnings run has officially ended, which means we have a tight window of opportunity forming between July 23 and Oct. 23. Knowing when a run isn't going to happen is just as important as knowing when a run is going to happen.

Identifying this pre-earnings pause allowed us to sell a 15% allocation of Apple when the stock dipped below our momentum price point of $415 earlier Tuesday.

If the stock dips to less than $410 we'll sell the remaining 15% allocation.

Being 30% invested for a possible July rally was OK but far from our ideal "fully loaded" 60%-70% allocation that we will be able to employ during the three months of action between the earnings report and the fall launch of the new iPhone lineup.

Because of the tentative action ahead of the July 23 earnings report, the Street is severely underestimating the potential impact of a new iPhone lineup.

This sentiment is set to dramatically change in two weeks as the stock action will finally be free to begin its process of pricing in a fall bonanza. We caught a glimpse of this positive action during the recent run from $388 to $423. We expect to see much more as Apple emerges as the top play on Wall Street in the second half of 2013.

The new iPhone lineup represents the iPodification of Apple's most important business segment. When multiple colors and sizes of the iPod were released in 2004, they produced triple-digit hypergrowth.

A similar phenomenon could happen on a global scale in the aftermath of the fall launch. Speculation suggesting this budget iPhone will negatively impact Apple shares is absurd. As Morgan Stanley noted, the overall impact on Apple's gross margin will actually increase due to the shift in product mix. Apple watchers have put together a video of what the budget iPhone will look like and judging from the 500 comments, reviews are overwhelmingly positive. You can watch the video at Mac Rumors.