It is one of the busiest sections of the winning season.
More than a fifth of Dow’s S&P 500 and 13 components will report on the final quarter of this week – earnings range from high-tech companies like Microsoft to industrial giants like Caterpillar and 3M.
Craig Johnson, chief market technician at Piper Sandler, says there is a earnings report that is the “elephant in the room” – Apple.
“It is a big part of all these indices,” Johnson told CNBC’s “Trading Nation” on Friday. “Apple will be the one to watch and set the tone, just like what you saw with Netflix, will set the tone with some of these FANG actions.”
Apple, the largest publicly traded share, has a weight of about 7% in the S&P 500 weighted by market value. The report is due to be released on Wednesday afternoon. Analysts consulted by FactSet forecast gains of 13% and sales growth of 12% in the quarter ended in December.
Johnson said Apple is gearing up for a technical breakthrough if enthusiasm after earnings drives stocks up. He identified a cup and handle pattern that formed on the charts – a technical bullish signal characterized by a rounded bottom and a consolidation period that suggests a pause in the stock before its bullish trend.
Apple is not the only high-profile report released this week. Danielle Shay, director of options at Simpler Trading, is looking at the new Tesla component of the S&P 500. which also reports its results on Wednesday afternoon.
“Tesla has done absolutely fantastic and has exceeded earnings expectations for the past five quarters,” said Shay during the same interview. “I think this is Tesla’s opportunity to prove to everyone that retailers are not wrong about that, and if we get a great Tesla hit, I really think it could lead to a pretty strong momentum.”
Shay is targeting $ 1,000 in Tesla shares – an 18% gain from the current level. Tesla was one of the hottest stocks in 2020, rising more than 1,100% from its lowest point in March.
“However, if it doesn’t, and we end up seeing Tesla pull back, then it will just be a great buying opportunity,” said Shay.
Analysts expect Tesla to earn $ 1.04 cents a share in the December quarter, more than double the previous year. Sales must have grown 43%.
Disclosure: Shay holds TSLA.
Legal notice