SCHD ETF signals major bullish shift — this week is critical

The Schwab US Dividend Equity ETF (SCHD) has staged a strong comeback in the past few months, mirroring the performance of US indices like the Dow Jones and the Nasdaq 100. 

The popular dividend fund has formed the highly bullish golden cross pattern, pointing to more gains in the coming weeks. This article explains why this week will be critical for the SCHD ETF.

SCHD ETF golden cross points to more gains

The daily chart shows that the SCHD ETF has been in a strong rally after bottoming at $23.63 in April when Donald Trump delivered his “Liberation Day” speech, unleashing tariffs to all countries. 

It has already moved into a bull market after surging by over 20% from its lowest point this year. Most importantly, the stock crossed the important resistance level at $26.83, its highest level in June this year. 

The stock has also formed the highly bullish golden cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. This pattern is one of the most bullish patterns in technical analysis.

All oscillators have continued soaring in the past few months. The MACD indicator has moved above the zero line, while the Relative Strength Index (RSI) is approaching the overbought level. These are signs that the stock has the momentum. 

Therefore, the stock will likely continue soaring as bulls target the key resistance level at $29.20, the highest point in 2024, which is about 7% above the current level. A drop below the support at $26.8 will invalidate the bullish SCHD ETF forecast. 

Corporate earnings season starts

In addition to the golden cross, the SCHD ETF will be in the spotlight as the earnings season starts this week. 

This is a highly important season because it will be the first one since Trump started the trade war. As such, analysts anticipate that companies will publish weak results. 

The general expectation is that these results will be the worst ones since the fourth quarter of 2023. These weak expectations are good for two main reasons. 

First, the low bar means that companies will have an easier way to beat expectations during earnings. Second, the weak results could mark a bottom, which is a highly bullish scenario. 

The most influential banks like Goldman Sachs, Morgan Stanley, JPMorgan, and Wells Fargo will publish their earnings this week. Similarly, other top companies like Netflix and BlackRock will also release their numbers. 

US inflation data ahead

The other notable catalyst for the SCHD ETF this week will be the upcoming US inflation data on Tuesday. These are important numbers that will provide more information about the impact of tariffs on the economy. 

The report will help to determine when the Fed will start cutting interest rates. Economists expect the data to show that inflation continued rising in June.

If analysts are right, it means that the Fed will have no incentive to cut interest rates. This, in turn, may hurt the stock market. 

The other notable catalyst for the SCHD ETF is the potential happenings at the Fed, where Jerome Powell is rumored to be considering resigning. 

Kevin Hassett, the head of Trump’s economic council, noted that the president was still studying firing him. The other notable catalyst for the SCHD ETF and the stock market is the potential for EU and US trade war.