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Chart points to a nearly 20% rally for Apple ahead of Wednesday's earnings report

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Apple earnings: Two market analysts on watch to watch

Apple is set to report on its holiday quarter after Wednesday's closing bell.

The company is expected to post earnings of $1.41 a share in its December-ended first quarter, up from $1.25 a share a year earlier, according to FactSet analysts. Sales are anticipated to have grown 12%.

Ari Wald, head of technical analysis at Oppenheimer, said a rotation back into large-cap tech stocks should provide a tailwind to Apple.

"If you think back to 2020, [Big Tech] dominated the first half of the year, and in the second half, they paused while a lot of the strength went to a lot of the smaller-cap value names," Wald told CNBC's "Trading Nation" on Monday. "Now we're seeing that change once again as I would say the balance of the market is getting a little extended."

A breakout of a "multimonth consolidation" pattern looks to be in the making, Wald said. He said $125, its recent low and a level close to its 50-day moving average, should act as support. Its prior high at $138 looks to be resistance. If it can break through that level, which Wald expects, he targets $170 as the next level to watch. That target implies nearly 20% upside.

Apple was down about half a point Wednesday at about $142 a share. The S&P 500 tech sector was sharply lower but has outperformed the broader market over the past three months.

During the same interview, Joule Financial President Quint Tatro warned that now might not be the time to jump into Apple. He said valuation is running too hot.

"Investors have to be very careful chasing a name or buying into earnings," Tatro said. "We think the stock has had a pretty significant run, and we think that we could see potentially a sell-the-news reaction, regardless of what happens."

Apple trades at 35 times forward earnings; the XLK technology ETF has a 28 times multiple.

"As an investor, I think that that's an opportunity. You take those sell-the-news reports, assuming again they put up a good quarter, which I think that they will, and you buy that weakness, But chasing the name ahead of earnings as it notches all-time highs is not for me," said Tatro.  

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