Another Technical Indicator Is Flashing a Bullish Signal

I told you last week that one prominent analyst predicts we're at the beginning of a new bull market. And it's no secret that I believe higher stock prices are in our future.

The S&P 500 Index and Nasdaq Composite Index have steadily marched higher in 2023.

And one technical indicator is making the bullish case even stronger...

Headline No. 1:

The S&P 500's advance-decline line hit a new all-time high.

McCall's Call: Over the past few weeks, the financial media has keyed in on the handful of stocks that have driven the market higher. And for good reason...

Through May 31, the five largest stocks in the S&P 500 – Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT), and Nvidia (NVDA) – were up more than 50% in 2023. The S&P 500 was up 9% heading into June. But without these five stocks, the index would have been up just 2%.

These companies have huge weightings in many market indexes. And as a result, their performance can sometimes drown out what's going on beneath the surface.

But one technical indicator is shining a light on all the underlying strength...

The advance-decline line represents the number of stocks that are up on a day minus the ones that are down. When the advance-decline line is rising, it shows that market breadth is improving.

And it just hit a new all-time high...

So while the talking heads would have you believe that only five stocks are leading the rally, that's simply not the case.

The rising advance-decline line tells us that many more stocks are contributing to the strength. When market breadth is improving like this, it means that the bulls are in control and there's momentum for stocks to move higher.

And it's yet another indication that stocks are likely to head higher from here.

Since its October low, the S&P 500 has risen more than 20% and entered a new bull market. And as I pointed out last week, a 20% rally off lows is often a good sign that high prices are ahead.

Even better, the index has broken through its resistance levels at 4,100 and 4,200. And it has put in a series of higher highs and higher lows. That's the hallmark sign of a new uptrend.

All of this makes me even more bullish on stocks through the rest of the year – and the rest of the Roaring 2020s.

Yes, there will be pullbacks along the way – stocks never go up in a straight line. But patient investors who weather the brief periods of volatility will be rewarded with strong returns over time.

Headline No. 2:

Toyota Motor (TM) will manufacture an all-solid-state battery as part of its electric-vehicle ("EV") project.

McCall's Call: This could be a big development for EV enthusiasts. But I'm still a bit skeptical about this news...

Car-manufacturing giant Toyota made a splash in the auto market after announcing that it will offer high-performance, solid-state batteries in its new EVs.

The company has already committed to shifting its lineup of vehicles from internal combustion engines ("ICEs") to electric versions over the next few years. It aims to introduce 10 new battery-powered models and sell 1.5 million EVs annually by 2026.

But this news is important for a few other reasons...

EVs face two main challenges: They take a while to charge and have limited range when compared with ICE vehicles. Those are valid concerns.

EVs can take up to an hour – and in some cases an entire night – to get a full charge. And their current average driving range is about 290 miles, whereas a traditional vehicle has a 460-mile range.

But advancements in battery technology are working to solve those problems...

Regular readers know that I'm bullish on next-generation battery technology. Right now, a lot of companies are working on different variations of battery chemistry and composition to boost their output.

Solid-state batteries are one of these innovations. These state-of-the-art batteries can hold more energy – so they can go farther on a single charge – and don't take as long to recharge.

And based on Toyota's recent press release, the company is confident that it has achieved a "technological breakthrough" in this battery tech.

The company estimates that its new batteries will have a range of nearly 750 miles and can even be recharged in as little as 10 minutes! And it hopes to have them in its EVs as soon as 2027.

If these estimates are true, it would be a big leap for EV technology. Many gas-powered car owners might even rethink their choice of vehicle.

But like I said, I'm still skeptical...

For starters, Toyota arrived rather late to the EV space. A lot of other automakers jumped on the trend earlier, and they've also made huge commitments to EV production over the next few years.

But solid-state battery technology has been elusive for most of them.

I'm a bit surprised that a latecomer has been able to crack the battery code so quickly. So I'll believe it when I see it.

But I'll be more than happy to eat my words if I'm wrong!

Here's to the future,

Matt McCall
Editor, Daily Insight
June 16, 2023

P.S. The stock market and our offices will be closed on Monday, June 19 in celebration of Juneteenth. We'll pick back up with our normal publishing schedule on Tuesday afternoon. Enjoy the holiday!

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