The Schwab US Dividend Equity ETF (SCHD) has crashed hard recently, falling below the 50-day moving average and the crucial trendline. It has dropped from the year-to-date high of $29.45 to $27.87, its lowest swing since November 5. 

Bad news for SCHD ETF

The daily chart shows that the Schwab US Dividend Equity ETF has suffered a harsh reversal in the past few weeks. It has remained in the red in the last 12 consecutive days, its longest streak in the red. 

Notably, the fund has moved below the 50-day Exponential Moving Average (EMA), meaning that bears are becoming more powerful. 

Also, the SCHD ETF has moved below the ascending trendline that connects the lowest swings since June this year. It failed to move below this trendline six times since that period. This trendline was part of the ascending channel pattern shown in black.

The Schwab US Dividend Equity is now attempting to cross the 100-day moving average at $27.7. A drop below that level will point to more downside for the highly popular fund.

The Relative Strength Index (RSI) and the MACD indicators have also been in a strong downward trend, with the former approaching the oversold level. 

If this crash continues, the next point to watch will be the 23.6% retracement point at $27.51, followed by the 38.2% retracement point at $26.3. 

Still, there is a likelihood that the SCHD rally is just taking a breather, meaning that it will stage a strong comeback soon. Historically, stocks and other assets often retreat after rising to a crucial level and then bounce back. 

Why the Schwab US Dividend Equity ETF has slumped

The SCHD ETF has retreated as data show that the inflow trend in the fund has started to deteriorate. Its best month in terms of inflows was in October, when it added $1.8 billion in assets. This growth then dropped to $1.6 billion last month and $967 million this month.

SCHD’s retreat is also because of several key companies that have suffered a deep reversal in the past few weeks. 

A good example of this is Lockheed Martin, the giant defense contractor whose stock has plunged by 20% from the year-to-date high. It has moved to $490, and is hovering at the lowest level since July 23.

Other companies in the military industrial complex like Raytheon, General Dynamics, and Boeing have also crashed in the past few months. This decline is mostly because the ongoing defense spending has already been priced in by market participants.

Ford is another top laggard in the SCHD ETF this year as its stock crashed by over 30%. It has dropped to $9.96, its lowest level since August even as Tesla stock has surged to a record high, making it more valuable than other vehicle brands combined. Still, Ford’s performance has been significantly weaker than that of General Motors, which is down by just 14.4% from the year-to-date high.

Texas Instruments has also contributed to the SCHD ETF retreat as its stock crashed by 14.15% from the year-to-date high. TXN’s business is going through a major slowdown as demand for its chips wanes.

UPS is another top laggard in the SCHD fund as the deliveries company also continued falling. Its stock is down by over 17% from the year-to-date high.

These companies have been offset by a sharp increase in other popular names in the fund like Blackrock, Cisco, Home Depot, and Bristol Myers Squibb. The next key catalysts for the SCHD fund will be the upcoming Federal Reserve decision on Wednesday and Donald Trump’s policies.

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The Hungarian forint strengthened a bit against the US dollar as traders positioned themselves for the upcoming Federal Reserve and Hungary’s central bank decision. The USD/HUF pair was trading at 390, a few points below the year-to-date high of 398. 

Hungarian central bank decision

The USD/HUF exchange rate will be on the spotlight on Tuesday as Hungary’s central bank delivers its interest rate decision.

Economists expect that the bank will leave interest rates unchanged at 6.50%, where they have been in the last three meetings. 

This will be a crucial meeting because it will be the first one under Mihaly Varga, the recently appointed central bank governor. He is a Viktor Orban ally, who was the finance minister before. 

Varga’s goal will be to revive the economy, which has been ailing for a long time, ahead of the upcoming election in 2026. 

Therefore, there are odds that Varga will embrace a more aggressive rate-cutting policy in a bid to boost growth. In a recent report, the European Union warned that the Hungarian economy will grow by just 1.8% in 2025 after stagnating ths year. Its 2024 performance was the lowest in Europe and was much lower than the expected 3.4%. 

Hungary’s inflation has dropped in the past few years, as it moved from over 25% in 2022 to about 3.7% in November. Therefore, the decision by the bank to cut more rates would be justified.

In addition to low interest rates, the government is seeking to recharge the economy by investing in the housing sector and hiking salaries. 

Federal Reserve interest rate decision

The USD/HUF par will also react to the upcoming Federal Reserve decision scheduled on Wednesday. 

This will be a crucial meeting because it will set the tone for what to expect in the coming year under the Trump administration. 

The Fed has hinted that it will cut interest rates by 0.25%, bringing the year-to-date cuts to 1%. However, there are rising odds that the Fed will have a hawkish twist because of the pledged promises by Donald Trump. 

Trump has pledged to slash taxes, hike tariffs, and deport millions of illegal aliens, which are all inlationary. For example, huge tariffs for imported goods will lead to inflation since companies pass these costs to consumers.

Removing millions of illegal aliens in the country would also lead to labor shortages in the country, leading to high inflation numbers. 

These events will come at a time when the US is struggling to deal with inflation. Data released last week showed that the headline inflation rose to 2.7%, while core CPI moved to 3.3%.

USD/HUF technical analysis

USD/HUF chart by TradingView

The daily chart shows that the USD/HUF exchange rate retreated to 390 from the year-to-date high of 398.3. It has remained above the 50-day Exponential Moving Average, meaning that the bullish trend is still intact. 

The pair has also rallied above the key resistance point at 373.60, the highest swing in April and June this year. The Relative Strength Index (RSI) has moved from the overbought level at 70 to the current 52 and is tilting downwards. 

There are signs that the USD to HUF exchange rate has formed a bullish pennant pattern, a popular bullish sign. If this happens, the next point to watch will be at 398.34, followed by the psychological point at 400. 

The bullish view will become invalid if the USD/HUF pair drops below the 50-day moving average at 382.

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The JPMorgan Equity Premium Income ETF (JEPI) stock has had a strong performance this year as it jumped to a record high of $60.52. Its total return this year stood at 15%, underperforming the S&P 500 index, which has risen by about 27.3% this year. 

JEPI has risen by 15.9% in the last twelve months, while the S&P 500 has jumped by almost 30% this year.

Why the JEPI ETF has risen

The JPMorgan Equity Premium Income ETF has risen by over 15% this year as American stocks have rebounded. The S&P 500 index has roared to a record high, continuing a trend that has been going on for years.

The fund has jumped because of how it is structured. This fund uses a covered call strategy, where the fund has invested in popular companies in the S&P 500 index. In this, it has invested in 132 companies like Amazon, ServiceNow, Meta Platforms, Mastercard, Microsoft, Visa, and NVIDIA. 

On top of this, the fund has used the options market to generate returns. It does this by by selling call options tied to the S&P 500 index. A call option gives users the right, but not the obligation to sell an asset at a certain strike price. 

JEPI receives a call option premium, which it uses to pay its investors in the form of dividends every month. This explains why the fund has a dividend yield of about 7%.

Therefore, JEPI benefits when American stocks are in an uptrend because of the 132 blue-chip companies it has invested in. 

The options trade on the S&P 500 works like this: if the index falls, the trade becomes worthless since the fund can buy it at a cheaper price. If the index rises, the fund benefits by having the option to buy it at a cheaper price. 

The challenge, however, comes up when the S&P 500 index is in a strong rally. When this happens, the fund misses an opportunity, especially when the index rises above the strike price.

JPMorgan Equity Premium Income ETF outlook for 2025

The JEPI ETF has done fairly well since its inception. Its total return in the last three years stood at over 23%, which coincided with the stock market rally.

2025 could be a challenging year for the market now that stocks and most assets have become highly overvalued. 

Also, the upcoming Donald Trump administration has pledged to impose tariffs and do mass deportations in the country. These actions are highly inflationary, which could see the Fed slam its brakes on the easing process.

The other potential risk for the JEPI ETF and other US stocks is that the market will start getting worried about the rising US debt. Data shows that the debt load has jumped to over $36.3 trillion, and will likely hit $40 trillion in 2025 or 2026. 

There is a risk that the US could go through a Lizz Truss crisis, especially if Trump attempts to pass unfunded tax cuts. At the time, UK stocks and bonds crashed, making her the shortest-serving UK prime minister.

Therefore, a combination of a major trade war, higher inflation, and unfunded tax cuts, could make 2025 a more difficult year for the market. Worse, as shown in the chart below, the JEPI ETF has formed a rising wedge pattern, a popular bearish sign in the market. 

Therefore, there is a risk that it may drop to $53.35, its lowest point in August, which is about 10% below the current level. Read more: JEPI ETF forecast: here’s why the stock could reverse soon

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The iShares Core Dividend Growth ETF (DGRO) has retreated in the past few days as American stocks lose momentum and as investors book profits. It has retreated by over 2.85% from its highest level this year and is hovering at its lowest point since November 2021. So, is there a good reason to invest in the DGRO ETF?

Reasons to avoid the DGRO ETF

The DGRO ETF is one of the top funds for dividend investors in the United States. It is a four-star rated fund by Morningstar and has accumulated over $30.6 billion in assets under management. 

The fund tracks the Morningstar US Dividend Growth Index, which is made up of 414 companies that have a proven track record of dividend appreciation. It is mostly beloved because of its substantial dividend growth, especially because of its 23.3% compounded annual growth rate (CAGR) in the last ten years. This CAGR is better than the sector median of 6.3%.

The challenge, however, is that DGRO does not have a strong dividend yield. Data on its website shows that its trailing twelve-month yield stood at 2.17%, slightly higher than the SPDR S&P 500 (SPY) 1.16%. 

Indeed, investors who have allocated cash in the DGRO ETF have lost money in the last five years. Its total return in the last five years was about 70%, while the benchmark S&P 500 index rose by 105%.

The same trend has happened this year as the fund has risen by about 20%, while the S&P 500 index has risen by almost 30%. The tech-heavy Nasdaq 100 index has done much better than these funds as it jumped by 41% in the last three years. 

Therefore, with DGRO, we have a dividend fund that does not pay a sufficient dividend and one that continues to lag behind benchmark assets. 

Top iShares Core Dividend Growth companies

The iShares Core Dividend Growth’s underperformance is because of its top companies. Unlike the S&P 500 and Nasdaq 100 indices that are mostly tech-heavy, the DGRO ETF is mostly made up of companies in the financials industry.

JPMorgan, the biggest bank in the United States, is the biggest part of the fund. It is followed by other large companies in the US like Broadcom, Apple, Microsoft, Exxon Mobil, Chevron, and Johnson & Johnson. 

Most of these companies have done well this year. JPM stock has jumped by over 40% this year, bringing its market cap to over $675 billion. JPM is now more valuable than Bank of America and Morgan Stanley, combined.

Broadcom stock price has also surged, bringing its market cap to over $1 trillion, helped by the ongoing demand for AI chips. Apple shares have jumped by 30%, while Microsoft has risen by 20% this year. 

DGRO ETF stock analysis

The daily chart shows that the DGRO ETF stock has been in a strong uptrend in the past few weeks. It has formed an ascending channel, which connects the highest and lowest swings since July 2024.

The fund remains above the 50-day and 100-day Exponential Moving Averages. However, it is about to drop below the 50-day moving average, and the lower side of the ascending channel.

Therefore, there are odds that the fund will have some more downside, similar to what the SCHD ETF formed. If this happens, DGRO may drop to the 100-day moving average at $62, which is about 2% below the current level.

In the long-term, however, the DGRO fund will continue doing well, although it will lag the mainstream funds like SPY and QQQ. 

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The JPMorgan Nasdaq Equity Premium ETF (JEPQ) and Nasdaq 100 Covered Call ETF (QYLD) funds offer some of the biggest yields in the United States. JEPQ yields 9.30%, while the QYLD yields 11.46%, much higher than what the Nasdaq 100 index offers. So, how did these funds perform in 2024, and what is the outlook for 2025?

JEPQ ETF 2024 performance

JEPQ is a top exchange-traded fund that provides investors with exposure to the Nasdaq 100 index. Unlike other popular Nasdaq 100 funds like QQQ, the fund aims to provide monthly dividend payouts to investors using call options.

A call option is a financial trade that gives investors a right, but not the obligation, to buy an asset at a certain price and an expiry date. In its case, the fund has invested in the 100 companies that make the Nasdaq 100 index, including Apple, Microsoft, NVIDIA, and Amazon.

It has then sold or written a call option for the fund, receiving a premium. In this case, it benefits if the Nasdaq 100 index and the underlying stocks jumps. In theory, it can also benefit if the fund stays stagnant since it will pocket the call option premium. 

The JEPQ ETF has broadly underperformed the Nasdaq 100 because of its strong rally. In a covered call ETF, a strong rally in the underlying asset reduces returns since it hits the strike price, missing the upside. 

The JEPQ ETF’s total return this year was 27.5%, much lower than the Invesco QQQ’s (QQQ) 32%. However, in the long term, the JEPQ ETF has risen by 51% in the last three years compared to QQQ’s 42%.

Read more: JEPQ ETF stock sits at an all-time high: 3 catalysts to watch

QYLD ETF performance in 2024

The Global X Nasdaq 100 Covered Call ETF (QYLD) is another fund that aims to generate returns by investing in technology companies. 

Like JEPQ, its portfolio is made up of 100 companies that make up the Nasdaq 100 index. It then writes or sells corresponding call options of the same index. Altogether, it aims to generate returns that correspond to the Cboe Nasdaq 100 BuyWrite V2 Index. 

QYLD ETF has a higher dividend yield than JEPI since it pays about 11.46%. Its average four-year dividend yield has been 12.57%, which is much higher than other dividend-focused ETFs like SCHD and DGRO

The QYLD ETF has not done well over time, despite its strong dividend yield. Its three-year total return was just 19.7% compared to QQQ’s 41.90% and JEPQ’s 51.40%. 

Read more: QYLD vs JEPQ: which is a better Nasdaq covered call ETF?

Outlook for JEPQ and QYLD for 2025

The stock market has done well in the past few years, with the Nasdaq 100 and S&P 500 indices more than doubling.

2025 may be a more difficult year for the market because of the stretched valuations and the soaring US debt.

Donald Trump has made many pledges, some that may have a negative impact on the stock market.

As Mark Zandi noted recently, the next existential threat for the US stock market is the bond market now that public debt has jumped to over $36.2 trillion. Trump has pledged to deliver more tax cuts, which will be unfunded. 

He has also pledged to cut government spending and has appointed Elon Musk to lead these efforts. The challenge, however, is that DOGE’s responsibilities must be passed in Congress, which will be highly unlikely.

Therefore, there could be a major economic crisis in the United States in the coming months as we saw in 2022 during Lizz Truss’s era as the UK prime minister. 

On top of this, stocks may go through a valuation reset as also happened in 2022. Heightened volatility may have a slight benefit to the covered call ETFs like QYLD and JEPQ but the impact will be muted. The QYLD ETF had a negative return of 19% in 2022, while QQQ shed over 32%.

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