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Apple is about to report earnings, and this is the one thing investors need to watch

Here's what to expect from Apple's earnings

One of the biggest companies in the world is about to report earnings: Apple.

The iPhone maker will release its quarterly results after the bell Tuesday in one of the most closely watched earnings releases of the reporting season.

The company has a fine line to tread here, according to Gina Sanchez, CEO of Chantico Global.

"I'm not sure that expectations are that low. I mean, the expected consensus number is $2.09, but the whisper number is actually $2.18. So, I think there's actually some built-up expectation," Sanchez said Monday on CNBC's "Trading Nation."

Analysts surveyed by FactSet anticipate a 10% decline in profit this quarter on weaker comparisons from a tax-fueled increase last year and as the U.S.-China trade war continues to cloud its outlook. Slowing iPhone sales growth has also spooked investors – revenue in that segment is expected to have dropped 12% this quarter.

"The wild card in the Apple numbers really has to be the expansion of services — and services is Apple TV+ and their credit card," said Sanchez. "So, the question is, can those start to make up for slowing iPhone sales and the problems they're having in China?"

Apple's services segment, which includes the App Store and Apple Pay, has grown to become a larger slice of overall revenue as it pivots from a pure hardware company. Annual sales in services expanded from $16 billion in 2013 to $37 billion in 2018.

"That's the upside for Apple, but I think there's actually quite a bit of optimism being priced in already," Sanchez said.

The technical setup for Apple looks strong heading into earnings, according to Ari Wald, head of technical analysis at Oppenheimer.

"It sets up positively how we see it," said Wald. "As we look back at these very, what was wild trading swings in Apple, those swings have narrowed. I think we're now in a position where the stock is showing signs of breaking to the upside, that it's reversing the downtrend that it had been in since October."

Apple has been one of the hardest hit by the ongoing trade war – at its worst, it fell nearly 40% from a peak last October to a January low. It clawed its way back from that trough, though remains 11% off its record high.

Gains this summer mark "a resumption of what is still a long-term uptrend in the stock. So, we are expecting new highs looking ahead. You also have top-down tail winds from a relatively and broadly strong tech sector. So, for us we're bullish on the market, we're bullish on tech, tough not to be bullish on Apple," said Wald.

Apple shares are up 5% this month, in line with the broad XLK technology ETF's gains. It is up 32% for the year.