Sid Mokhtari, chief market technician at CIBC Capital Markets.Supplied
2026 is off to a volatile start.
On Jan. 28, the S&P/TSX Composite Index closed at a record high and swiftly fell approximately 1,200 points over the following six trading sessions before rebounding to a fresh closing high on Feb. 10.
To help investors navigate these rapidly changing markets, The Globe and Mail reached out to CIBC’s chief market technician Sid Mokhtari to get his take on where stocks may be headed.
Mr. Mokhtari’s technically driven portfolio has consistently outperformed the broader index across a wide range of market conditions.
He publishes a monthly report with his top 10 stock ideas, which The Globe and Mail reports on the first trading day of each month. He screens and selects stocks from the largest 100 members by market capitalization within the S&P/TSX Composite Index.
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.
For February, his basket of top 10 stock ideas includes nine new stocks and one carryover from the previous month. In the materials sector, he added three stocks to his basket of top picks – Methanex (MX-T), NGEx Minerals (NGEX-T), and Orla Mining (OLA-T), and there is one carryover from January - Nutrien (NTR-T). In the energy space, he added Peyto Exploration & Development (PEY-T), Suncor Energy (SU-T) and Whitecap Resources (WCP-T). In financials, Bank of Montreal (BMO-T) and IGM Financial (IGM-T) were selected. Lastly, in industrials, AtkinsRéalis Group (ATRL-T) was included in his basket of top picks.
According to Mr. Mokhtari, over the past 30 years, the S&P/TSX Composite Index has delivered an average return of 0.7 per cent in February. Amongst the leading sectors are industrials and energy with gains of 1.5 per cent and 1.4 per cent, respectively. The technology sector is the leading laggard with an average return of negative 1.4 per cent.
In his best ideas report published on February 1, he stated, “For 2026, we recommend a more cautious approach with a lower directional bias, given the convergence of two cycles — year two in the U.S. presidential cycle and year four in a bull market cycle. We favour a balanced strategy, incorporating both GARP [growth at a reasonable price] and defensive factors such as quality, lagging value, and some low-volatility exposure, all adjusted for relative strength and momentum.”
During our conversation last Friday, Mr. Mokhtari shared his outlook for equity markets and discussed potential stock and ETF investment opportunities.
During the final two trading days of January and extending into the first week of February, we saw North American equity markets sell off. The S&P 500 briefly broke below its 50-day moving average before rebounding. What’s your take on equity markets?
Firstly, I think we are in the second most challenging month of the year from a seasonal perspective.
We are seeing distribution patterns, i.e. top building conditions within a lot of technology names. They put out large capex numbers, issued good guidance, released good numbers and they beat on so many earnings factors yet the stocks are being sold so sentiment for the largest GICS sector in the U.S. - technology - has turned somewhat sour and that’s going to weigh heavily as we go forward until we get to the next quarter or we get more incoming data from the large cap tech space.
I’m not negative but I am very cognizant that we are in a cycle here. There are two colliding cycles that will offer challenges from a market directional perspective.
For the S&P 500, internals are rotational. In other words, as tech subsides, we have seen positive cyclical rotation within transportation, industrials, materials, as well as some of the financials.
If we are of the view that tech can remain pressured for a while, on the surface the index itself is likely to be pressured.
I think people need to look beneath the surface and be a lot more active than before and not so passive.
Looking at your quant matrix, there are no technology stocks in the top two quadrants. They’re in the bottom two quadrants - the consolidating and lagging quads.
Absolutely. Over 50 per cent of the members of the NASDAQ 100 are down by over 20 per cent. We have a lot of bearish markings for both the Russell 2000 index as well as the NASDAQ 100 where 50 per cent of their members have declined by over 20 per cent.
Does that indicate a bottom to you? We’re seeing markets bounce back right now.
I think the bounce is reasonable as we had a very sharp decline in so many areas.
But we also are seeing more undercuts of the 50-day moving averages for the members of the NASDAQ 100 as well as the Russell 2000.
A lot of names within the technology space, in particular, which were backed by the growth factor in our matrices, are falling into our consolidating as well as lagging quads, as you were suggesting.
We are noticing that a lot more value, a lot more quality and dividend yield, and by some measures even low volatility stocks are coming up into our improving and leading quads. Certainly, value has taken over the leadership in our matrix factor models.
How long might this shift into value, quality and dividend yield factors continue?
Anecdotally speaking, based on our own quad work, when factors newly enter a quad, we typically look at three months of duration sustainability.
So, I’m inclined to view quality, dividend yield, and low volatility to continue to show better alpha, relative strength in contrast to growth and momentum as well as beta, which have come down into our lagging quad.
In fact, we ran a ratio between growth and beta and divided that by a low volatility factor. There are ETFs that are associated with quantitative factors and the ETF that is associated or related with growth and beta is Invesco S&P 500 High Beta ETF (SPHB-A). When we used that ETF and divided it by Invesco S&P 500 Low Volatility ETF (SPLV-A), we see a clear peak in a lot of technical indicators, i.e., monthly stochastics, as well as monthly RSI, and the measured move of that ratio also peaked in terms of amplitude of the previous breakout. So, we are very cognizant that as we go forward beta is likely to negatively mean revert against low volatility. We’ve already seen a lot of growth, beta, momentum stocks have fallen into our lower quad categories.
Your basket of top 10 best ideas is concentrated in four sectors this month. In fact, seven of the 10 names are in just two sectors - materials and energy.
We called for 2026 to be a year with a cyclical tailwind.
We have seen larger accumulation trades within commodities, materials and industrials, all very much tied to this recent Dow Theory buy signal confirmation. We saw transports, after 12 to 24 months of lagging, finally breakout. We saw truckers and airliners pushing to the upside and new highs relative to other areas of the market. The Dow Theory buy signal confirmation is certainly a good validation of why we are cyclically tilted in our basket selection.
Our matrix looks for names that are leading in alpha as well as seasonally adjusted for hit rates [a hit rate is a measure of frequency of observations], and they are sitting within those sectors that you highlighted.
Chemicals tend to show well in the month of February through to April. Methanex fits in that category. Methanex is a name that we like because of its seasonal tendencies in the month of February through to April.
We like copper on that basis as well, and NGEx Minerals has an allocation to copper.
Nutrien was a carryover for us, which again shows a similar backdrop as Methanex within seasonally adjusted momentum, relative strength and quads that are improving.
How do the charts look for the stocks you just mentioned?
Downside for Methanex is closer to $60 to $61. That’s your 10-week moving average that is rising. Upside for Methanex is closer to $75. At $65, it’s neutrally based in our models. I’m of the view that this is a name to either use weakness to add exposure or stay long if you hold it.
NGEx is a name that we have had in our previous baskets as you may recall. It is still holding all of its medium and longer-term averages. It is similar to other precious metals, like gold and silver, where after the recent parabolic moves, they may have entered a consolidation phase.
We’re still of the view that metals, in general, copper as well as base metals, silver and gold are still holding uptrends despite the recent overbought conditions, so it’s difficult to walk away from them. For NGEx support is marked at $26, and the upside is closer to $33.
Did you want to highlight your energy picks?
Whitecap and Peyto are the two names that we like in addition to Suncor.
Whitecap has good momentum and good torque to the price action of oil. It does have an upside trajectory closer to $15.
Peyto is called a darling for its dividend yield as well as trend followers, it fits very well in those two categories. For Peyto, we have a technical bias that can project as high as $28 on the recent leg up. We think this is a name that should be able to maintain its upward trend and trajectories.
We added Suncor because it is very strong based on fundamental as well as technical factors. The stock does look overbought but I do believe that people will be buying any dips just given how strong the leadership of Suncor has been.
The measured move for Suncor technically was $75 and we may have hit that but the positive thing about Suncor is its alpha that is very strong, and that’s likely to help us with our alpha exposure within our model.
For Suncor, you mentioned buying the dip. Where is that level?
$67 to as high as $69, that’s the range on the downside. We have a medium-term moving average currently at $65 and rising at about $1 every month. So, if the stock price eases, investors will use the 50-day average or 10-week moving average as a proxy for support, which is currently at $65 and rising.
With respect to your Dow Theory buy signal, you hold one industrial stock - AtkinsRéalis.
It shows well in a lot of our models. We like this stock fundamentally as well. It’s very much tied to the uranium thesis. The stock recently gapped up above $98. That was the technical pivot. The breakout above $98 for ATRL projects to about $120. We like this stock. I think we should use any weakness to get exposure to ATRL.
With the recent pullback, we’ve seen stocks decline 10 per cent, and in some cases 20 per cent, particularly precious metals stocks. Are there stocks in your quant matrix that are at or near oversold levels that look attractive as buy the dip buying opportunities?
Not everything is becoming deeply oversold because they’re very quickly finding support levels at the 50-day moving average.
Some of the large-cap stocks, Kinross Gold (K-T) would be a good name to review at the 10-week average or 50-day moving average.
Agnico Eagle Mines (AEM-T) is a good name.
With the price of the commodity at these levels, people may be looking for laggards, stocks that have not run in the same fashion as the large-cap gold and silver names, so they are going down the quality line and trying to look for cheap stocks or laggards to invest in - not a bad idea in my opinion.
Speaking of which, you hold a mid-cap gold stock, Orla Mining, in your basket of top ideas.
That’s a good name for us fundamentally.
The stock broke out above the $20 level previously, and it’s now come back to the $21 level, still holding its 10-week moving average. Trend models are in good shape. Momentum conditions are in good shape. We do want to be able to take advantage of some of these pullbacks, at least in the short term, by adding exposure to some names that we like fundamentally as well as quantitatively.
What do you think about the crash in Bitcoin?
Problematic. I do think that it’s a very big proxy to risk. If we think markets, in general, have downside risk, Bitcoin should correspond directionally to that.
Bitcoin does have a technical level closer to US$63,000 to as low as US$57,000. It’s trying to mean revert. Mean reversion is very difficult for Bitcoin to carry too far on the upside, it will have limitations. So, I’m still very patient for Bitcoin and would like to see a validation of US$63,000 to as low as US$57,000, and then we will see whether or not a base can redevelop down there.
Last month, you highlighted several ETFs to readers, including Global X U.S. Infrastructure Development ETF (PAVE-A), which already has a double-digit gain year-to-date, and it held up during the recent market pullback. You also highlighted U.S. Global JETS ETF (JETS-A), whose share price broke above US$30 to a multi-year high. Are there other ETFs that are rising in your rankings?
PAVE fits very well with the Dow Theory buy signal that has been confirmed recently.
ETFs that are coming right to the top are tied to energy, so VanEck Oil Services ETF (OIH-A) ranks number one with an 11-point jump in delta. Then, we also have iShares Global Energy ETF (IXC-A), that’s another one that is rising in its ranking.
State Street SPDR S&P Biotech ETF (XBI-A) is picking up 12-points of delta. So, there is a good mix of ETFs that are rising in our models. Energy certainly has been coming up. Biotech’s there. State Street SPDR S&P Pharmaceuticals ETF (XPH-A) is also there and would also be a good ETF to review.
At the beginning of each month, I published a report with your top 10 best ideas. In this month’s report, I invited readers to email questions to me that I would ask you. Here are a couple of questions from readers.
How does the chart for iShares S&P/TSX Capped Information Technology Index ETF (XIT-T) look to you?
XIT technically had a pattern that was top heavy that began in September of last year and became a head and shoulders, and the neckline for XIT was closer to $77. That neckline broke and the measured move for XIT is closer to $58 to as low as $56. We almost reached that level. If our assumptions are correct about technology for the next little while, anything with beta, growth and momentum within the tech space is going to remain somewhat pressured. I think the rally attempts for XIT are probably limited, and the ETF is likely to stay in the penalty box because it needs to do more work to recover.
The $60 level to as low as $58 - that’s your primary level of support.
Can you recommend a few Canadian ETFs for investors who want to avoid U.S. investments?
BMO has an industrial ETF that is called ZIN - BMO Equal Weight Industrial Index ETF (ZIN-T). ZIN fits the Dow Theory buy signal that we recently had. ZIN has good support closer to $49.50 and upside closer to $58 to as high as $60. It may be short-term overbought, but it directionally has all the right elements of trend, momentum, alpha, relative strength - everything that you look for in a chart.
ZMT, BMO Equal Weight Global Base Metals Hedged to Canada Index ETF (ZMT-T), would be another area that’s tied to the Dow theory, cyclical tailwind. Downside risk is closer to $100, and I think that’s a great opportunity to use weakness to add ZMT.
ZMT, or copper stocks, in general, or base metal ETFs in both the U.S. and Canada, went sideways for about four years and broke out last year in the late summer. I think that big base is likely to continue to bring about additional gains for ZMT. Upside for ZMT is at $151 to as high as $160.
And then iShares S&P/TSX Capped Energy Index ETF (XEG-T). XEG can measure up closer to $25. Dips should be bought. It does have a support closer to $20 to as low as $19.25
If you want to be equal weight, there’s BMO Equal Weight Oil & Gas Index ETF (ZEO-T).
Any final thoughts that you want to share with readers?
Be mindful that 2026 is a cycle year. I am very mindful that two cycles are colliding with one another [year two in the U.S. presidential cycle and year four of the bull cycle] and that is going to present serious challenges but timing it is very difficult to determine. We estimate it will occur between the first quarter and the third quarter. We think the stronger part of 2026 will be in the fourth quarter. So, we are very mindful that the risk associated with a deeper correction is something that we have in our roadmap.
This Q&A has been edited for clarity.