ETrustFinancial

Over 90% of Nasdaq 100 components are trading below their 200-day moving average
Historically, such a setup has always yielded positive returns for the index in the following 12 months
Should the index keep falling over the next 2-3 months, I intend to take the opportunity to gradually buy high-quality tech names
Except for Russian indexes—which are a different story right now—the NASDAQ Composite is officially the worst-performing stock index among major markets year-to-date, having lost around -30.5%.NASDAQ Composite Daily Chart

As we can see in the above chart, the tech-heavy benchmark is hovering dangerously close to the support created by this year's low—reached in mid-June. A sustained breakout below this level would likely imply the beginning of yet another leg down.

Since several younger investors had been mainly hoarding tech/growth stocks since the pandemic, the bloodbath might have been worse for them—with some individual stocks losing over 80%-90%.

Plus, as shown in Mike Zaccardi's article for Investing.com earlier this week, Millennials sold significantly more investments than any other age group amid this year's rout.

Selling Behavior Among Different Generational Groups

Source: Ally Invest

But to look at the situation today from a long-term investor's perspective, we can either panic or try to remain clear-headed and understand that opportunities arise precisely from moments like these.

Let's take a look at this exciting statistic:

Percent Of Nasdaq 100 Stocks Above Their 200-Day Moving Average

Source: Marketcharts.com

The chart above shows the percentage (vertical axis) of stocks on the Nasdaq 100 trading above their 200-day moving average. Over 90% of the index's components are currently below this level, an obvious result of the strong bear market we are experiencing.

While this might seem like a panic element, let's delve deeper into the data with the second image below.

1-Year Returns For Nasdaq 100 In Such A Scenario

Source: Marketcharts.com

I don't want to bore you with statistics and technical terms. Still, simply put, if you look at the distribution of returns, you will notice that every time a similar setup occurred in the past (from 1996 to the present, even considering the Dotcom bubble) in the following 12 months, the Nasdaq 100 posted positive returns.

Since past performance does not guarantee future performance, we always have to approach the data with the proper caution.

However, putting everything together, this could be a very interesting moment to start repositioning (gradually) on tech equities, perhaps taking advantage of potential further declines in the 2-3 months ahead. That's especially if the Nasdaq sustains a breakout below this year's lows.

You could do this by taking direct exposure to the index or doing the proper analysis to find quality tech at discount valuations in the case of individual stocks.

As always, no one can predict the future, but at least investing based on data is worth a lot more than randomly investing in the long term.

Disclosure: The author is long on the Nasdaq and will buy more positions if the selloff continues.This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counseling, or an investment recommendation. As such, it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset is highly risky and must be evaluated from multiple points of view. Therefore, any investment decision and the associated risk remains with you and I suggest you start investing with etrustfinancial. A platform that will control your risk and produce a positive result.

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Ethereum Proof Of Work (ETHW) Gains 30%, Is More Upside Coming?

The Ethereum Proof of Work (ETHW) token had piggybacked off the popularity of the Ethereum Merge. In a bid to maintain the network in its original mechanism, developers had forked the Ethereum network,

creating their own token in the process. The ETHW had been launched after the Merge was completed and was airdropped to ETH holders. The digital asset then suffered massive declines just days after launch.

Ethereum Proof Of Work Recovers
The Ethereum Proof of Work (ETHW) token distribution had been ongoing for days after the Merge. The reason for this was exchanges needed more time to distribute the tokens to their customers who currently hold ETH on their balances. Binance was the most recent crypto exchange to complete its distribution, giving the digital asset a much-needed boost.

It was in the early hours of Tuesday when the largest crypto exchange in the world had completed its ETHW distribution. The crypto exchange had also opened deposits and withdrawals for the cryptocurrency, promptly increasing the demand for ETHW.

Following this, the price of ETHW had added more than 30% to its value in a matter of hours. It broke out of the $5 range, which it had been trending in for the last couple of days, and barreled above $7 at the rally’s peak.

Ethereum Proof of Work (ETHW) price chart from TradingView.com

The rally has since leveled out, but the digital asset continues to lead the crypto market in terms of gains. It is currently number 1 on the Top Gainers list on Coinmarketcap, which lists the 24-hour gains for the digital asset at 33.64%.

ETHW Poised For More Gains?
Ethereum Proof of Work (ETHW) token might not be the most popular coin in the market currently, but it is definitely leaving its mark. Its value is helped by the fact that the tokens are being sent to ETH holders who have previously proven to hold their coins for a long time.

Related Reading: More Than 125,000 Crypto Traders Liquidated, Here’s How Much They Lost
The token has also been creating support just under the $6 point, making this a possible bounce point for the cryptocurrency in the event of a downward correction. Additionally, there is more demand for the cryptocurrency now that it can be moved in and out of crypto exchange Binance.

ETHW’s all-time high also sits at $14, which took place in the bear market. If the growth of Ethereum Classic over the years is anything to go by, ETHW may go on to record massive gains over the years. However, as is typical for hard-forked tokens, they never quite do better than the original coins. In this case, ETHW will likely not reach the Ethereum levels anytime soon.

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The US Federal Reserve has recently delivered its most significant interest rate hike since 1994 to counter four-decade high inflation, pushing the S&P 500 deeper into bear market territory.

As investors scramble for places to park their money, one option is to seek refuge in cash-rich companies that pay steady dividends. On top of providing a safe income stream, such stocks can usually fare better through prolonged economic fallouts.

Sectors that generally perform well in such an environment are healthcare, defense, retail, and mega caps.

One place to look for such players is the dividend aristocrats index. The group includes stocks in the S&P 500 that have hiked their payouts for at least 25 consecutive years. During market volatility, investors tend to turn to these dependable payers.

Here are three cash-rich, dividend-paying stocks from the group which you can consider adding to your income portfolio:

1. Target

The biggest concern when picking a dividend stock for a long-term portfolio is whether the company can produce strong cash flows in good and bad times. Minneapolis-based retailer Target (NYSE:TGT) certainly fits the bill. It closed Tuesday at $144.70.

TGT Weekly Chart

The company has steadily increased its dividend every year for the last 50 years—a period that includes the dot-com collapse of the early 2000s, the financial crash of 2008-2009, and the COVID-19 pandemic of the past year. Its latest dividend hike came early this month when the retailer raised its quarterly payout by 20% to $1.08 per share.

Target's current share price provides a good entry point for long-term investors that wish to lock in its more than 3% dividend yield. The stock has lost more than a third of its value this year on concerns that sales and profit margins will decline as inflation curbs consumer spending.

This uncertain period won't last for long, in our view. Analysts expect Target to shed the current excess inventory by August and return to solid profitability during the critical back-to-school and holiday sales seasons. Furthermore, the retailer has a robust balance sheet, strong cash flows, and a manageable payout ratio.

2. Abbott Laboratories

Like retailers, health care stocks can provide a regular and growing income stream even when waters get rough. That is because its services remain crucial to society despite the macroeconomic environment. Plus, economic swings don't typically curb the roll-out of new drugs and medical devices.

In this space, we like Abbott Laboratories (NYSE:ABT), a manufacturer of global medical devices, generic drugs, and nutritional products. The Illinois-based company has paid yearly dividends for nearly half a century, making it a solid name to have in your portfolio. ABT closed Tuesday at $104.41.

ABT Weekly Chart

During the pandemic, Abbott has seen its diagnostic sales thrive after it invented BinaxNOW, an over-the-counter home testing device for the COVID-19 virus that brought in billions in additional sales.

However, even after the bulk of the COVID pandemic, Abbott Labs' growth prospects remain bright. The company has a diversified portfolio, making everything from glucose monitors to surgical tools. Demand for such products is ongoing, generating consistent free cash flows and dividend income for investors.

Shares of Abbott have weakened about 25% this year. Still, the health care provider has delivered impressive returns over the past five years, gaining more than 100%, including dividends.

The company pays $0.47 a share quarterly dividend with an annual dividend yield of 1.83%. The payout has grown over 11% each year during the past five years.

3. Visa

The global pandemic has forced many companies to cut or suspend their dividends, creating more uncertainty for income-seeking investors. Still, many companies have continued their dividend-paying streaks, thanks to durable businesses and strong cash generation capabilities.

One such enterprise is the payment behemoth Visa (NYSE:V), which continued to hike its payout, despite the economic turmoil. Visa closed Tuesday at $194.39.V Weekly Chart

If one were to judge the stock by its paltry 0.79% yield, it wouldn't look like an attractive dividend pick. But that doesn't provide a complete picture.

Visa has a 22% payout ratio, which is highly sustainable, offering the company more room to grow future payouts. Just in the past five years, the company's dividend has grown 20% on average each year. That makes it an excellent stock to buy and hold in your portfolio.

The company should also receive a boost from stronger travel and leisure spending in the aftermath of the pandemic. Chief Financial Officer Vasant Prabhu told Bloomberg in a recent interview:

"We do see the affluent consumer back spending in force, especially on travel and restaurants and entertainment. The affluent consumer had cut back quite a bit during the pandemic not because they couldn't afford it but because they were not able to get out and about. The affluent consumer is definitely back."