This is one of the busiest parts of the earnings season.
More than a fifth of the S&P 500 companies and 13 Dow components will report on their latest quarter this week – ranging from technology companies like Microsoft to Microsoft giants like Caterpillar and 3M.
Craig Johnson, Piper Sandler’s chief market technician, says there is one earnings report that is the ‘elephant in the room’ – Apple.
“It’s a big part of all these indices,” Johnson told CNBC’s “Trading Nation” on Friday. “Apple will be the one to watch, and it will set the tone, just like you saw with Netflix, it set the tone with some of these FANG shares.”
Apple, the largest listed stock, has a weight of about 7% in the S&P 500 with a market value and will be reported on Wednesday afternoon. Analysts surveyed by FactSet expect earnings to be 13% and sales growth to be 12% in the December quarter.
Johnson said Apple is proposing a technical breakthrough if earnings enthusiasm will drive the stock higher. He identified a cup-and-handle pattern formed in the charts – a bullish technical sign characterized by a rounded bottom and a period of consolidation indicating a break in the stock before heading higher.
Apple is not the only sensational report this week. Danielle Shay, director of options at Simpler Trading, monitors the new S&P 500 component Tesla. which also announced its results Wednesday afternoon.
“Tesla has performed absolutely fantastically and it has beaten earnings expectations over the past five quarters,” Shay said during the same interview. “I think this is the opportunity for Tesla to prove to everyone that the retailers are not wrong in this one, and if we get a good beat from Tesla, I think it could cause a strong momentum movement.”
Shay is aiming for $ 1,000 for Tesla shares – a gain of 18% from the current level. Tesla was one of the hottest stocks in 2020 and has risen more than 1100% since the March bottom.
“However, if it does not come through, and we finally see Tesla pull back, in that case it will just be an excellent buying opportunity,” Shay said.
Analysts expect Tesla to earn $ 1.04 cents a share in its December quarter, more than double a year earlier. Sales are expected to grow by 43%.
Disclosure: Shay holds TSLA.
Disclaimer