The Schwab U.S Dividend Equity ETF (SCHD) stock price has remained in a tight range this month, even as other broad blue-chip indices like the Nasdaq 100 and S&P 500 soared to a record high. SCHD was trading at $27.28, down from the all-time high of $28.6 and the year-to-date high of $27.75.
This article provides a forecast for the fund and explores whether it is a good investment to make.
SCHD ETF stock price technical analysis
The daily timeframe chart shows that the SCHD ETF stock price has rebounded in the past few months, moving from the April low of $23.41 to a high of $27.75. This rebound coincided with the broad stock market rally as investors moved on past Donald Trump’s tariffs, which he unveiled on his Liberation Day.
The ETF has remained above the 50-day Exponential Moving Average (EMA), a sign that bulls remains in control. It also remains above the Ichimoku cloud indicator and the major S/R level of the Murrey Math Lines tool at $26.56.
The SCHD ETF is slowly forming a bullish flag pattern, which is made up of a vertical and a descending channel. It is now forming the flag section of this pattern.
However, the risk is that the fund is equally forming a bearish divergence pattern as the Relative Strength Index (RSI) and the MACD indicators have pointed downwards.
Therefore, more SCHD ETF gains will be confirmed if it moves above the upper side of the flag at $27.75, its highest level on August 25. A move above that level will point to more gains, potentially to last year’s high of $28.61.
Earnings and the Federal Reserve
The main catalysts for the SCHD and other American equity ETFs will be the upcoming earnings season, which will kick off officially next week when companies like JPMorgan and Wells Fargo publish their financial results. These earnings will provide more color about the impact of Donald Trump’s tariffs on corporate America.
Data compiled by FactSet shows that the average earnings growth of the S&P 500 Index is expected to be about 8%, which will mark the ninth consecutive quarter of earnings growth. The most likely outcome is where the earnings growth will be stronger-than-expected, as they have done in the past.
However, the main risk for the SCHD ETF is that about 20% of its companies are in the energy sector, which analysts are a bit pessimistic about. Analysts see three of the five sub-industries – oil & gas equipment & services, integrated oil & gas, and oil & gas exploration and production- expected to report earnings decline.
Refining and marketing and storage and transportation are expected to report strong numbers. The biggest energy companies in the SCHD ETF are ConocoPhillips, Chevron, EOG Resources, Schlumberger, Valero, and OneOk.
The other main catalyst for the SCHD ETF is the upcoming Federal Reserve interest rate decision in October. Analysts expect the bank to cut interest rates by 0.25% in the meeting later this month as the economic weakness continues.
Still, the main risk for the SCHD ETF is that it continues to underperform the markets. Its total return this year has been negative compared to SPY’s gains of 14%.
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