The Schwab U.S. Dividend Equity ETF (SCHD) has recently experienced a downturn, but several factors suggest a potential upward reversal:
Technical Indicators:
Moving Averages: SCHD's 50-day simple moving average is $28.66, while its current price is $28.34, indicating a position just below this average. However, the 100-day and 200-day simple moving averages are $27.95 and $26.79, respectively, with the current price above both, suggesting a longer-term bullish trend.
StochRSI: Oversold on multiple timeframes. We find it more powerful and accurate than RSI.
Wave A limit: Reached opposite move limit after hitting a Wave 5, which can act as support
Recent Developments:
Dividend Stock Performance: Dividend-paying stocks, including those in SCHD, have faced challenges due to volatility in the 10-year Treasury yield. However, with expectations of more stable interest rates, dividend-focused investments like SCHD could become more attractive.
Fundamentals of Holdings: SCHD's top holdings, such as Home Depot (HD) and Cisco Systems (CSCO), are recognized for robust dividend growth and significant share buyback programs, which can enhance shareholder value and support the ETF's performance.
Market Sentiment: Investor interest in dividend-paying equity ETFs has increased, with inflows more than doubling over the past month. This heightened demand could positively impact SCHD's price.
We see a near-term reversal to the $28.80 area -- a 0.50/share increase from current levels. Scalpers looking for a quick pop could benefit with a precise entry.
Be alert.
Trade green.