Sid Mokhtari, chief market technician at CIBC Capital Markets.Supplied
On Wednesday, the S&P 500 closed above 7,000 for the first time. Meanwhile, the Nasdaq Composite ended the session above 24,000 for the first time. And the S&P/TSX Composite Index is approximately 1 per cent away from closing at an all-time high.
For now, investors are setting aside concerns about economic growth and inflation arising from higher oil prices.
With the first-quarter earnings season upon us, the focus for investors appears to be on company fundamentals and earnings growth.
To get a sense of the durability of this rally, The Globe and Mail spoke with CIBC’s chief market technician Sid Mokhtari.
Mr. Mokhtari has a proven track record in stock picking and market forecasting.
He publishes a monthly report with his top 10 stock ideas. He screens and selects stocks from the largest 100 members by market capitalization within the S&P/TSX Composite Index. His technically driven stock recommendations have consistently outperformed the broader index across a wide range of market conditions.
In the first quarter, his portfolio of top picks rallied 4.3 per cent, outperforming the S&P/TSX Composite Index by approximately 0.7 percentage points.
Importantly, his disciplined process has delivered strong long-term returns. His stock selections have outperformed the S&P/TSX Composite Index for the past four calendar years. In 2025, his portfolio of stock selections rallied 51.3 per cent, compared to a 28.3 per cent price return for the S&P/TSX Composite Index. His stock selections also outperformed the TSX Index in 2024, 2023 and 2022 by 5.8 percentage points, 6.3 percentage points and 2.7 percentage points, respectively.
The Globe and Mail publishes a monthly report with Mr. Mokhtari’s top 10 stock ideas on the first business day of each month. On April 1, The Globe and Mail revealed his stock picks for April.
His diversified basket of stock selections includes nine new stocks and one carryover from the prior month.
Once again, energy is the portfolio’s largest sector exposure where he holds three stocks: Enerflex Ltd. (EFX-T), International Petroleum Corp. (IPCO-T) as well as Peyto Exploration & Development Corp. (PEY-T), which was carried over from the previous month.
The portfolio holds two financial stocks: Great-West Lifeco Inc. (GWO-T) and National Bank of Canada (NA-T). In industrials, Canadian National Railway Co. (CNR-T) and Mullen Group Ltd. (MTL-T) were included in his basket of top picks.
In consumer discretionary, Restaurant Brands International Inc. (QSR-T) was selected.
In materials, fertilizer company Nutrien Ltd. (NTR-T) was added.
Lastly, in the utilities sector, Capital Power Corp. (CPX-T) replaced ATCO Ltd. (ACO-X-T).
On April 13, I spoke with Mr. Mokhtari who shared his outlook for equity markets and discussed stocks and ETFs where he sees upside potential.
Over the weekend, President Trump announced the U.S. military will block traffic at Iranian ports, yet the market overlooked this news with major U.S. indices continuing to rally. From a technical perspective, what does this strength or resiliency suggest for major equity indices?
The sector that is being viewed as one that can stay more resilient in the face of some of those challenges that we’re getting from the situation in the Middle East is the technology space. We are seeing semis as well as AI-related companies show strong breadth expansion.
We still want to be specific about our choices and selective. But, those two areas are carrying the bulk of the heavy lifting right now. On the surface, we are seeing much better price action than what is beneath the surface.
Both the S&P 500 and Nasdaq Composite are showing good breadth expansion within the tech space.
I noticed in your ETF rankings, Roundhill Generative AI and Technology ETF (CHAT-A) holds the number one position. iShares Semiconductor ETF (SOXX-Q) jumped 18 points to the number three position. And VanEck Semiconductor ETF (SMH-Q) also ranks well.
Precisely to your point, we follow FactSet very carefully in terms of earnings estimate revisions, revenue growth, margins and ROE - all of those factors that FactSet is publishing are mostly positively associated with the technology space. The tech space is producing the revenue that the industry is looking for, as well as the positive earnings estimate revisions, which is typically associated with alpha.
I think technology is going to be able to carry itself higher throughout the earnings season, and because the tech weighting is very large in the S&P 500, I think that it’s going to be able to keep S&P 500 better buoyed.
Month-to-date, currently the top performing stock in the S&P/TSX Composite Index is a technology stock – Celestica (CLS-T). Where do you see this stock headed?
Celestica after, call it, six months of going sideways, rebuilt itself over its 200-day or 40-week average, which was closer to about $350, and it managed to hold that successful. The fact that Celestica managed to get above $420, it has now resumed its uptrend forces. In other words, from a pattern perspective, Celestica established a six-month bull flag, or a pole and pennant, which is often associated with an uptrend resumption or accumulation in an uptrend. And that breakout above $420 does have a projection for price discovery that can reach as high as $590 and potentially higher.
In the U.S., Intel is currently the top performing stock month-to-date in the S&P 500 Index. How does this tech stock’s chart look to you?
I like Intel (INTC-Q). It’s a name that has been building, call it, a two or three-year base.
And it’s not just Intel, Dell (DELL-N) is also breaking out, Hewlett-Packard (HPE-N), some of these old technology names are now showing positive emerging relative strength on both an absolute and relative basis, and that’s a rotation that has been happening.
We have also seen leadership in financials. When we spoke last month, you highlighted three bank stocks, National Bank (NA-T), CIBC (CM-T) and the Bank of Montreal (BMO-T), which have all delivered strong returns so far this month.
We added National Bank to our 10 best ideas for the month of April.
These are still the three banks that one should stay with or if they want to be pair trading within the bank sector or within financials, these three banks would be the long side of the financial sector.
Let’s talk about your diversified portfolio of 10 stocks across six different sectors. Can you highlight a few of your holdings?
With National Bank, there is quality to earnings. It has a defensive backdrop, a strong momentum seasonality backdrop going into earnings, and it does have a strong alpha backdrop as well.
I have a price target of $205 to as high as $207. It can even go higher. The breakout for National Bank is closer to $190 to as low as $185, which are good support levels if it pulls back.
Dip buying is the right strategy for the banks that I’ve highlighted i.e. National Bank, CIBC and the Bank of Montreal.
We added Capital Power (CPX-T) to our portfolio. It’s in the right sector. It is showing a periodic pause and refresh, so it is consolidating time to time, but it does not lose its alpha, nor does it lose its trend conditions. We have a technical new high bias for CPX that could measure up toward $75.
In the energy sector, you highlighted several large-cap stocks in a recent research note: Suncor (SU-T), Cenovus (CVE-T), Imperial Oil (IMO-T) and Canadian Natural Resources (CNQ-T). All of these energy stocks have remarkable double-digit year-to-date returns.
Some of the large caps are definitely cash flow machines like Suncor, Imperial Oil, and Cenovus, particularly if oil prices stay over US$80 for the next, call it, month or two. You’re probably going to see estimate revisions rise. I think it makes sense to continue to use dips to add exposure to that sector.
We like the breadth in the sector running at about 80 per cent. Anything north of, call it, 70 to 80 per cent, you typically see dip buying within the sector.
Earlier you discussed breadth expansion within the technology sector. Can you comment on breadth in the overall market? In a recent research note, you suggested weak breadth supports a selective investment approach.
If we expect the market to be able to show strong durability, you typically see a breadth thrust environment - and we don’t have that condition.
In fact, we saw breadth make new lows with the conflict in Middle East. We are seeing some recovery, but it’s a very segmented recovery.
We are seeing technology being able to carry some of that, along with energy as well as utilities and materials. That’s where breadth is strong, but that’s not a very large part of the U.S. market to be able to carry it forward. So, the fact that we’re seeing some positive expansion within technology is quite welcoming.
For Canada, it’s certainly a much better composition because it is a lot more weighted to energy as well as cyclicals that are tied to materials.
When it comes to materials and the gold sector, which recently had a big drawdown, gold held the 200-day or 40-week or the longer-term average quite successfully and reversed course. Although, I don’t think we’re in the right seasonal positive backdrop for gold until we go into late summer.
Can you comment on the S&P/TSX Composite Index, which is closing in on a new record high.
With every price or index push higher, it loses its momentum. We don’t have a positive momentum signal for the benchmark index, both in the U.S. and Canada.
This is a stock picker’s environment. I don’t think we should focus too much on the index because I think it’s masked by a recovery attempt that doesn’t have enough momentum to carry it through. I’m still very mindful that we may retest the lows or have a potential undercut.
I do think this is the year that two cycles overlap and collide with one another. Year two of the U.S. presidential cycle is historically the weakest year in the cycle. The other one is year four of a bull cycle. We had strong double-digit returns in the three years following 2022, and year four, after such strong double-digit returns, at least historically, we know drawdowns are deeper than what we have seen.
As we go forward into the summertime, we should be mindful that we’re probably going to have weaker price action for both the S&P/TSX Composite Index and the S&P 500.
When we put it together, year four of a bull cycle and year two of a U.S. presidential election cycle, we should expect more volatility.
When we spoke last month, you said to expect volatility in the markets to extend into the third quarter.
Correct. We still think that year two of the presidential cycle in year four of a bull cycle is typically very back-end loaded to the fourth quarter. We should be able to see some evidence of a market that may be able to generate breadth again, rebuild itself, as we go into year end.
For now, it looks to be a market of stocks. We have to be selective and focus on fundamentals and see if technicals and quants are all matching with one another.
Any regional ETFs that you want to highlight?
Generally speaking, if we’re in a late cycle narrative, emerging markets do well.
Latin America is showing well. We like Franklin FTSE Latin America ETF (FLLA-A) or iShares Latin America 40 ETF (ILF-A). Some commodity regions, like Brazil, are showing well. Franklin FTSE Brazil ETF (FLBR-A) is a Brazilian ETF.
And then the other one that has had good delta and has come up all the way to the top of our rankings is iShares MSCI Taiwan ETF (EWT-A), which is tied to semiconductors and memory chips.
For industry/theme sector ETFs, how many ETFs do you rank?
We’re sitting at 101 because we recently added a space ETF, Procure Space ETF (UFO-Q) - and it is ranked number one.
There’s been a lot of positive sentiment around space stocks like MDA Space, which is listed in both the U.S. and Canada. It has a lot of interest by the Canadian hedge fund industry.
The number two ranked ETF is Global X Lithium & Battery Tech ETF (LIT-A), followed by an oil services ETF.
The other two that have high delta are Roundhill Generative AI & Technology ETF (CHAT-A) as well as iShares Semiconductor ETF (SOXX-Q).
Month-to-date, MDA Space is one of the top performers in the S&P/TSX Composite Index. What’s your technical take on it in Canadian dollar terms?
The technical pattern is very constructive. It has a reverse head and shoulders, which is a bottom building pattern. It also has a confluence of accumulation, which is a cup and handle pattern as well, which is usually a condition you see when there is more demand. It has resistance at about $47. A close above $47 does have a projection that can extend itself towards $57 to as high as $60. So, it’s a very strong setup and it’s still holding all its averages in both absolute and relative terms. It scores well in our matrix that has been showing improving conditions. And it’s a name that has a lot of interest by the hedge fund community.
Lastly, is there any chart or ranking in your work that surprises you?
I wasn’t expecting to see Canadian banks rise at this magnitude in our matrix. We have seen Canadian banks coming to the top of our rankings. I think maybe it’s a factor bias that is tied to quality as well as momentum and somewhat of a defensive bias if we think the market is correct in terms of having some volatility.
Banks are always going to be a good area of focus when you are going into a market that has a volatility backdrop.
Is there anything else that you want to mention to readers?
We have to be very cognizant that we’re going to be faced with volatility because of the two colliding cycles.
Focus on fundamentals as we go into the earnings season. I think this is a market of stocks, and we need to be a lot more selective than before.
This Q&A has been edited for clarity.