It is one of the busiest periods of earnings season.
Over five Standard & Poor’s 500 Companies and 13 Daw Components will release a report for the fourth quarter of this week – profits range from leading tech companies like Microsoft to industry giants like Caterpillar and 3M.
Craig Johnson, chief market technologist at Piper Sandler, says there is one earnings report and it’s “the elephant in the room” – Apple.
“It’s a big part of all these indicators,” Johnson told Trading Nation on CNBC on Friday. “Apple will watch it, set the tone, just like what you watched with Netflix. Accent with some of these FANG stocks. “
Apple, the largest publicly traded stock, has a weight of approximately 7% in the market cap weighted S&P 500 index. It is scheduled to release a report on Wednesday afternoon. Analysts polled by FactSet expect a profit of 13% and sales growth of 12% for the quarter ended December.
Johnson said Apple is bracing for a tech breakthrough that should be enthusiastic after earnings push the stock higher. It has identified the cup and handle pattern that has formed in the charts – a bullish technical signal characterized by a rounded bottom and a consolidation period indicating a pause in the stock before it heads up.
Apple isn’t the only high-profile report released this week. Daniel Shay, Options Manager at Simpler Trading, sees the new S&P 500 item Tesla. It will also release its results on Wednesday afternoon.
“Tesla has performed extremely well and has exceeded earnings expectations in the past five quarters,” Shay said during the same interview. “I think this is Tesla’s opportunity to prove to everyone that retailers are not wrong about this, and if we get a great win from Tesla, I really think it could lead to a very strong momentum move.”
Shay is targeting $ 1,000 Tesla shares – an 18% gain from the current level. Tesla was one of the hottest stocks in 2020, rising more than 1,100% since its March low.
Shay said, “However, if that doesn’t happen, and we end up seeing Tesla back down, in this case it would be just a great buying opportunity.”
Analysts expect Tesla to earn 1.04 cents a share in the December quarter, more than double the previous year. Sales are expected to grow by 43%.
Disclosure: tea bearing TSLA.