Watch how a stock reacts to the news, not the news itself: this is an old trader's saying. Apple shares are displaying some resilient strength this morning following an earnings report that was interpreted both positively and negatively last night.

This may be a sign that people got too negative on the stock as Apple shares plunged from $700 to $400. It's now bounced back to near $540, with shares are up $7 to $537 ahead of trading this morning.

This trend now has the potential to feed on itself, as overly negative analysts are forced to revise their forecasts upwards, as is starting to happen this morning. Several analyst firms including Goldman Sachs and Cowen & Co. have alluded to this in their research notes.

Apple reported profits that beat analyst estimates by about .30 cents per share, though some anlaysts and investors griped that it's projecting flattish profits for its upcoming holiday quarter. In the pre-market hours, however, Apple's stock is strong following a sprinkling of analyst upgrades.

The Cupertino, Calif.-based purveyor of all things “i” reported posted quarterly revenue of $37.5 billion and quarterly net profit of $7.5 billion, or $8.26 per share. These results compare to revenue of $36 billion and net profit of $8.2 billion, or $8.67 per diluted share, in the year-ago quarter. Gross margin was 37 percent compared to 40 percent in the year-ago quarter. International sales accounted for 60 percent of the quarter’s revenue.

The company sold 33.8 million iPhones, a record for the September quarter, compared to 26.9 million in the year-ago quarter. Apple also sold 14.1 million iPads during the quarter, compared to 14 million in the year-ago quarter. It sold 4.6 million Macs, compared to 4.9 million in the year-ago quarter.

Several analysts upgraded their views on Apple today. RW Baird upgraded the stock and Cowen & Co. raised the price target from $550 to $590. Goldman said that its “numbers are going up.”

Cowen & Co. analyst Tim Arcuri said that Apple is “setting up” for a good fiscal 2014, primarily do the increased 4G LTE penetration, a new iPad cycle, and forthcoming product introductions. “Street numbers must come up,” he said.

The main concern among the worrywarts was that Apple's typically blockbuster holiday quarter has the potential to be relatively flat. In fact, the company is projecting the same profit numbers as last year.

Apple said revenue for the current quarter would be $55 billion to $58 billion, up 0.9 percent to 6.4 percent, from $54.5 billion a year earlier. It expects profit to be about the same.

One story that remains, however, is the accumulation of cash at the company, which should serve as support for the stock as well as the “Icahn Effect.” All things being equal, if a stock price is flat but its cash position is rising, that is going to put upwards pressure on the stock.

Apple said it ended the past quarter with $146.8 billion in cash and investments. The company paid out $2.8 billion to shareholders in dividends in the quarter and bought back $5 billion of its own shares.

Apple’s Board of Directors has declared a cash dividend of $3.05 per share of the Company’s common stock. The dividend is payable on November 14, 2013, to shareholders of record as of the close of business on November 11, 2013.

“We’re excited to go into the holidays with our new iPhone 5c and iPhone 5s, iOS 7, the new iPad mini with Retina Display and the incredibly thin and light iPad Air, new MacBook Pros, the radical new Mac Pro, OS X Mavericks and the next generation iWork and iLife apps for OS X and iOS,” said Tim Cook, Apple’s CEO, in a company statement.

“We generated $9.9 billion in cash flow from operations and returned an additional $7.8 billion in cash to shareholders,” said Cook, in comments that were clearly targeted at Carl Icahn.

Apple shares, which are trading at 12 times this year's earnings and 13 times next year's estimates, are still cheap relative to the broader market. The S&P 500 index is trading at about 19X earnings.