It is one of the busiest periods of the earnings season.
More than a fifth of S&P 500 and 13 Dow companies will report this past quarter this week – earnings range from tech companies like Microsoft to industry giants like Caterpillar and 3M.
Craig Johnson, chief market technician at Piper Sandler, says there is a earnings ratio that is the “elephant in the room” – Apple.
“It’s a big part of all these indices,” Johnson told CNBC’s “Trading Nation.” “Apple will be the one to watch and set the tone, just like what you saw with Netflix, it set the tone with some of these FANG actions.”
Apple, the largest stock traded on the stock exchange, has a share of about 7% in the market-weighted S&P 500. He will report on Wednesday afternoon. Analysts surveyed by FactSet anticipate a 13% increase in revenue and a 12% increase in sales in its December quarter.
Johnson said Apple is preparing for a technical escape if the excitement takes place after the gains propel the larger stock. He identified a cup-and-handle pattern that formed into charts – a technical sign characterized by a rounded bottom and a period of consolidation that suggests a break in stock before it evolves above.
Apple is not the only high profile report this week. Danielle Shay, director of options at Simpler Trading, is looking at Tesla’s new S&P 500 component. which also publishes its results on Wednesday afternoon.
“Tesla is doing absolutely fantastic and has exceeded earnings expectations in the last five quarters,” Shay said in the same interview. “I think this is Tesla’s opportunity to prove to everyone that retailers aren’t wrong about that, and if we get a great beating from Tesla, I really think it could lead to a pretty strong momentum.”
Shay is targeting $ 1,000 for Tesla shares – an 18% increase from the current level. Tesla was one of the hottest stocks in 2020, gathering more than 1,100% since the beginning of March.
“However, if this is not done and we end up seeing Tesla withdraw, then this will only be a great 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 increase by 43%.
Disclosure: Shay owns TSLA.
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