It is one of the busiest periods of the income season.
More than a fifth of the S&P 500 companies and 13 Dow components will report on their last quarter this week – those revenues range from leading technology companies such as Microsoft to industrial giants such as Caterpillar and 3M.
Craig Johnson, chief market engineer at Piper Sandler, says there is one revenue report that is the “elephant in the room”: Apple.
“It’s a big chunk of all of these indexes,” Johnson told CNBC’s “Trading Nation” Friday. “Apple will be the one to watch, and it will set the tone, just like what you’ve seen with Netflix, it set the tone with some of these FANG stocks.”
Apple, the largest publicly traded stock, has a weighting of about 7% in the market capitalization-weighted S&P 500. It will report Wednesday afternoon. Analysts polled by FactSet expect 13% profit and 12% revenue growth in the quarter ended late December.
Johnson said Apple is in the process of setting up a tech breakthrough as post-earnings enthusiasm pushes stocks up. He identified a cup-and-handle pattern that has formed on the charts – a bullish technical sign characterized by a rounded bottom and a period of consolidation that indicates a break in the stock before rising.
Apple isn’t the only high-profile report this week. Danielle Shay, options director at Simpler Trading, looks at the new S&P 500 component Tesla. who will also announce his results on Wednesday afternoon.
“Tesla has done an absolutely fantastic job, exceeding profit forecasts for the past five quarters,” Shay said in the same interview. “I think this is Tesla’s chance to prove to everyone that the retailers aren’t wrong, and if we get a great beat from Tesla, I really think it could lead to some pretty strong momentum movement.”
Shay is aiming for $ 1,000 for Tesla stock – a gain of 18% from current levels. Tesla was one of the hottest stocks in 2020, up more than 1,100% since the March bottom.
“However, if this doesn’t come through and we see Tesla pull out, then it’s just a great buying opportunity,” said Shay.
Analysts expect Tesla to have earned 1.04 cents a share in the December quarter, more than double from a year earlier. Sales are expected to increase by 43%.
Disclosure: Shay has TSLA.
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