December is historically a positive month for equity markets. According to a Nov. 30 research report from Sid Mokhtari, CIBC’s chief market technician, over the past 30 years, the S&P/TSX Composite Index has delivered an average return of 1.1 per cent, while the S&P 500 has trailed slightly with an average return of 0.8 per cent.
Mr. Mokhtari believes this December will follow historical patterns and his investment calls have been noteworthy.
Mr. Mokhtari publishes a monthly report with his top 10 stock ideas and his disciplined process has delivered strong returns. 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.
November was an outlier, with his basket of top picks underperforming the broader index. His stock selections delivered a positive return of 0.75 per cent but lagged the S&P/TSX Composite Index, which rallied 3.71 per cent. In the first 11 months of 2025, his portfolio of stock selections rallied 49 per cent, compared to a 27 per cent price return for the broader index. His stock selections also outperformed the S&P/TSX Composite Index in 2024, 2023 and 2022 by 5.8 percentage points, 6.3 percentage points and 2.7 percentage points, respectively.
For December, his diversified basket of stock selections includes nine new stocks and one carryover from the prior month. In the materials sector, he added three stocks to his basket of top picks – Americas Gold and Silver (USA-T), Equinox Gold (EQX-T) and Orla Mining (OLA-T). In financials, he has IA Financial (IAG-T) along with the sole carryover, Manulife Financial (MFC-T). He has two industrial stocks in his basket of top picks, Aecon Group (ARE-T) and Exchange Income (EIF-T). He added two stocks from the energy sector to his stock selections, Suncor Energy (SU-T) and Whitecap Resources (WCP-T). Finally, he has one technology stock in his basket of top picks – Celestica (CLS-T).
On Dec. 4, I spoke with Mr. Mokhtari who shared his technical take on equity markets and discussed investment ideas.
You have an impressive track record with your basket of top picks consistently outperforming the TSX Composite Index month after month and year after year. However, November was an outlier as you underperformed the index. What were the main reasons for the underperformance?
Not having gold and silver exposure was a detractor as both commodities had fantastic performance in November.
Also, AI-related names came under pressure. There were three stocks that really hurt us from an alpha perspective, AtkinsRéalis (ATRL-T), Shopify (SHOP-T), as well as Capital Power (CPX-T). All three of them are associated with data centers and AI and by some measures technology and momentum oriented.
Last month, you called for a year-end rally and suggested the S&P/TSX Composite Index might rebound to 31,200. It was an accurate prediction that came a bit early as we’re currently around that level. Will we see a ‘Santa Claus’ rally in December that will take the index higher?
We think November 20 and 21 established a very good trough for a lot of breadth factors.
When New York Fed President Williams entertained the idea of a rate cut announcement at the December meeting, the market reversed course following his remarks.
I believe that we should be able to push higher into year end. Equity markets should be able to build upon their recent momentum off the lows of November. I think the November lows provided a good reset environment. For the TSX, we can now measure higher towards 31,800 to as high as 32,100, those would be our next levels of observation on this recent push. And we are also seeing some rotation that favours value and growth.
Just to clarify, when you say the TSX can rise to 31,800, up to 32,100, there isn’t a specified time period?
That’s correct.
Are you standing by your year-end call of 7,000 for the S&P 500?
I don’t see why we can’t get there.
The only area that may challenge me on that front would be large-cap technology. These stocks are the underlying power for the S&P 500, and in recent weeks, we have seen some dispersion in terms of performance within the space. It’s becoming rather selective, but the tech space is still holding in well. And if there is a rate cut in the U.S., it is reasonable to say that we’re probably going to be better buoyed in U.S. financials. Some of the industrials can benefit from that, and the tech space, which has a large weighting in the S&P 500. So, if our views are correct on a rate cut, I think we should be able to get closer to that 7,000 mark.
You mentioned the dispersion of performance amongst large-cap technology-focused stocks. Which ones look the most attractive to you?
Broadcom (AVGO-Q). And Alphabet (GOOG-Q) still shows well, the stock having recently sharply broken out and putting on significant momentum. Apple (AAPL-Q) is also in the right category from that perspective.
Let’s talk about factors. In November was value the best performing factor?
Value came up very sharply. We had energy, materials and financials participating. In fact, we had 30 per cent exposure to value, and that’s what helped us last month.
Last month, we had a barbell strategy with a factor bias and value was an area of focus with a 30 per cent exposure to financials, which worked well for us.
But to your point, value has been a good source of alpha in the past month and past three months and that’s probably going to stay the course.
Earlier did you say value as well as growth are favoured going forward?
Yes, both value and growth factors have demonstrated enough positive rate of change to skew a lot of quant models to be taking positions in equities that are associated with those factors.
Having said that, we are also seeing some positive shifts, and that’s a reflection of the volatility that we had in the market in November. We have seen some positive rate of change within other factors – low volatility as well as quality along with size.
But if I want to stay true to the quantitative process as well as the technical process, I would say value and growth primarily are going to be the better sources of alpha.
In your basket of top picks for December, three of the 10 names are gold and silver stocks. Last month, you mentioned that December and January are seasonally strong months for gold. So, where’s the price of gold headed in the near term?
We’re in a price discovery for gold as well as silver. We measure upside towards US$4,200 to as high as US$4,500. As long as we’re above US$4,000 to as low as US$3,800, we’re in good shape, dips should be bought, and the seasonal backdrop is also very favourable for both gold and silver. It is not until we undercut US$3,800 that we may alter our views.
Can you give us your thoughts and technical target on silver?
As long as it stays above US$50 to US$52 an ounce, the commodity should be able to maintain its trend backdrop, which is very positive.
A measured move to US$57 to as high as US$62 would be the top side of the bands that we calculate on the upside. As long as it’s above the US$50 to US$52 range, I think it’s in good shape.
You have three gold and silver stocks in your basket of top picks this month – Equinox Gold, Orla Mining, and Americas Gold and Silver. Can you tell us why you added them and give us your price targets for these three stocks?
Equinox is a name that fits within the GARP model, which is growth at reasonable price.
In fact, the majority of quant models that are associated with a GARP strategy are now heavily populated with gold and silver stocks. Our GARP model now has over 40 per cent of its constituents tied to precious metal stocks. So, Equinox fits that category as well as Orla Mining.
For Equinox, in Canadian dollar terms, our measured move on the upside is $21.55. This is another price discovery that should, as long as gold and silver remain in good standing, be able to carry their weight on the upside.
For Orla Mining, on the upside, a measured move can take it to as high as $22. It’s a good stock to buy in periods of weakness. Dip buying makes sense for Orla Mining as well.
There’s been strong appetite for smaller-cap and mid-caps stocks within precious metals, and USA-T, Americas Gold and Silver, fits that category. It’s a very liquid, smaller-cap stock that has a lot of momentum. The technicals are very strong for this name. We are looking at what’s referred to as a ‘bull flag’, which is typically associated with uptrend continuation. I think USA-T can measure to as high as $7.
Are there other December selections that you would like to highlight?
We did get a very big shift into value, and energy is a value category.
Energy has been coming up in our matrix ranking process. We’re starting to see more oil-weighted names come into our tables. Suncor and Whitecap Resources are two names that came up in our ranking process that still have good upside. They are considered to be quality-based, and their indicators are not overreached.
For Suncor, once the stock broke out above $57, in Canadian dollar terms, it has a very strong technical backdrop, which is the base breakout effectively, and that’s a $10 measured move over $57 that can measure closer to $67 on the upside.
Similarly, Whitecap is showing a strong technical backdrop, a very durable trend backdrop with a price target closer to $13 on this measured move.
Speaking about breakouts, in a recent research note you said that shares of CIBC are set up for a breakout. Could you expand on that?
CIBC does score very well from a technical and quantitative perspective. I’m not saying that because I work here. Every point of reference for factors that we put in our models are being checked very well. So, the setup was good for a breakout and the stock has broken out of that range. In our opinion, it still does have momentum, a positive backdrop, and that could measure closer to $127 from where it is today.
Generally speaking, banks tend to do well in the fourth quarter when earnings come through in the month of December, and they do well into the actual earnings. But post earnings, they tend to consolidate, so I would not be surprised to see a period of price consolidation.
You screen 63 thematic ETFs, and you highlighted three areas last month: biotechs with SPDR S&P Biotech ETF (XBI-A) and ARK Genomic Revolution ETF (ARKG-A), semis with VanEck Semiconductor ETF (SMH-Q) and iShares Semiconductor ETF (SOXX-Q), and solar with Invesco Solar ETF (TAN-A). Do these ETFs still look attractive to you?
Gold and silver ETFs, not a surprise, are at the top of our rankings with almost a 10-plus delta on the positive side. In other words, they have jumped 10 points in our ranking relative to the previous month. Followed by biotech, which is a 25-point jump relative to the previous month. I think biotech and pharma have established a very strong breadth condition that typically brings about strength. I would not be surprised to see biotech, health care and pharma stocks perform well next year. And then there’s lithium battery, followed by semiconductors, and clean energy, iShares Global Clean Energy ETF (ICLN-Q) and Invesco Solar ETF, as you mentioned. So, they’re still up there. The only addition is that gold stocks have come right to the top of our basket.
What are the names of those ETFs?
VanEck Gold Miners ETF (GDX-A) is the gold miners and Global X Silver Miners ETF (SIL-A) is the silver miners. For biotech, there is either SPDR S&P Biotech ETF or iShares Biotechnology ETF (IBB-Q). Those two are associated with the biotech sector in the U.S. And then we have VanEck Pharmaceutical ETF (PPH-Q). Lithium battery is the Global X Lithium & Battery Tech ETF (LIT-A). So, they’re still very similar to what we had last month, except that gold and silver came right to the top.
Any changes or notable moves in your scorecard for geographic ETFs?
We are noticing that India has been coming up very nicely after a period of sideway consolidation. Its score is still rather soft but it is improving. We often refer to BMO MSCI India Selection Equity Index ETF (ZID-T) and iShares MSCI India ETF (INDA-A) to get exposure to India.
Japan, WisdomTree Japan Hedged Equity Fund (DXJ-A) is doing well. I also have Mexico, iShares MSCI Mexico ETF (EWW-A). The other ETF that we like is iShares MSCI EAFE Value ETF (EFV-A).
Bitcoin has been quite volatile in recent weeks, plunging to prices last seen in April. What are your thoughts on the recent weakness in Bitcoin?
Bitcoin has a fragile backdrop after breaking down below US$108,000, technically speaking, but in the near term, if our assumptions are correct for risk assets to be able to rally as we go into year end, Bitcoin is likely to be able to put on a rally as well. We are measuring Bitcoin to be able to reach US$100,000 to as high as US$105,000, those would be our measured moves on the upside. We are optimistic as we go into year end. Bitcoin and Ethereum should be able to participate on the upside.
Anything else that you want to highlight to readers?
We’re cautiously optimistic as we go into next year when it’s year two of the U.S. presidential cycle. Historically, year two is the weakest year in the cycle. It’s something that we should be aware of.
We have had three years of strong returns for the S&P 500 and year four following three years of strong double-digit returns, it’s a low observation when we look at history. So, we will need to be a lot more active and selective about our investment choices next year.
This Q&A has been edited for clarity.