The Schwab US Dividend Equity (NYSE:SCHD) ETF has moved sideways in the past few weeks, underperforming the broader market. It ended this week at $31.72, down slightly from its all-time high of $32.12. Still, the stock may be on the cusp of a bullish breakout after forming the highly bullish cup-and-handle pattern.
SCHD ETF Stock Has Formed A “Cup & Handle” Pattern
The four-hour chart shows that the ongoing SCHD ETF stock consolidation is the calm before the storm. For one, the fund has slowly formed a cup-and-handle pattern, a common continuation sign.
This pattern consists of two key sections: the cup and the handle. The cup features a rounded bottom with a horizontal resistance level at $31.97. It has a depth of $1.72, calculated by subtracting the low of $30.25 from the resistance level at $31.97.
The stock is now in the handle section, which is normally followed by a strong bullish breakout. The profit target is calculated by adding the depth and the upper side of the cup. In this case, the target price is $33.70, which is about 6% above the current level.
The bullish outlook is supported by the 50-period exponential moving average and the Ichimoku cloud indicator.
Schwab US Dividend Equity ETF Inflows Are Soaring
There are signs that American investors have continued to accumulate the SCHD ETF this year. Data compiled by ETF dot com shows that the fund has added over $8.4 billion in assets this year. This increase has brought its assets under management to over $91 billion, making it one of the biggest dividend ETFs in the world.
The fund has had inflows in the last seven consecutive weeks. It has had just one week of outflows this year.
This growth is likely because the fund is considered an anti-AI ETF because of its composition. While the fund has some semiconductor names like Qualcomm (NASDAQ:QCOM) and Texas Instruments (NASDAQ:TXN), most of its constituents are in traditional industries.
Consumer staples comprise 19.39% of the fund and is then followed by health care, energy, industrials, information technology, and financials. These companies include firms like UnitedHealth (NYSE:UNH), Coca-Cola (NYSE:KO), Chevron (NYSE:CVX), and ConocoPhillips (NYSE:COP).
Its composition is significantly different to other popular ETFs. For example, technology companies make up 33% of all companies in the S&P 500 and 54% of the Nasdaq 100 indices. As a result, the view is that the SCHD ETF may do better than the broader market if the AI bubble pops.
Indeed, the fund posted substantial gains earlier this year while top AI names such as NVIDIA (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) were struggling. Those early gains have helped it outperform the broader market year-to-date. Its total return of 16.6% surpasses both the Nasdaq 100’s 15.5% and the S&P 500’s 8.7%.
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