Sid Mokhtari, chief market technician at CIBC Capital Markets.Supplied
Sid Mokhtari, CIBC’s chief market technician, continues to deliver strong performance, with his basket of top stock picks up 48 per cent in 2025.
Many portfolio managers have been unable to outperform their respective benchmarks. According to a mid-year report of the S&P Indices Versus Active Canada Scorecard, 70 per cent of actively managed Canadian equity funds underperformed the S&P/TSX Composite Index in the first half of 2025. While this data is several months old, as of June 30, it does illustrate the performance challenges faced by many portfolio managers. Yet, Mr. Mokhtari’s disciplined approach makes successful portfolio management look easy.
Mr. Mokhtari publishes a monthly report with his top 10 stock ideas and his disciplined process continues to lead to portfolio outperformance. 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, and last month was no different. In October, his top picks delivered a 7.28 per cent price return, trouncing the 0.79 per cent gain for the S&P/TSX Composite Index.
In October, three stocks in his top 10 best ideas basket were top performers in the S&P/TSX Composite Index. Celestica (CLS-T) was the top performing stock in the index with a price return of 41 per cent. Aecon Group (ARE-T) was the fourth best performing stock in the index with a return of 30 per cent. Lastly, Shopify (SHOP-T) surged 18 per cent, coming in ninth place.
In the first ten months of 2025, his portfolio of stock selections soared 48.14 per cent, compared to a 22.37 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 November, his diversified basket of stock selections includes seven additions – AtkinsRealis (ATRL-T), Chartwell Retirement Residences (CSH-UN-T), Element Fleet Management (EFN-T), Great-West Lifeco (GWO-T), Manulife Financial (MFC-T), NuVista Energy (NVA-T) and Quebecor (QBR-B-T) – and three carryovers from the previous month, Capital Power (CPX-T), Shopify and TD Bank (TD-T).
On Oct. 5, The Globe and Mail spoke with Mr. Mokhtari who provided his technical take on the markets and discussed sectors, stocks and ETFs that may outperform into year-end. Also, with the fourth quarter reporting period just weeks away for Canadian banks, he highlighted the technical setup for bank stocks.
You recently published your top 10 best ideas list of stocks for November. The report was subtitled, “The missing breadth beneath the uptrend”, noting that breadth indicators peaked in July and have been declining. Can you give us your technical read on the S&P/TSX Composite Index and the S&P 500, and explain the implications of the falling breadth?
Most market technicians believe that breadth indicators are the most important technical factors for gauging market.
In hindsight, we were able to identify that the rate of change of breadth had peaked by July, and we saw a notable decline in breadth factors as we came into August and September. In September, it tried to reverse course and get some traction, which failed. Since September, we have been in a downward trending function for breadth indicators.
There’s one very famous indicator that we follow – it’s breadth summation. And that’s the rate of change of advances and decliners for U.S. broader indices at an exponential rate of change, and that is falling, which confirms our own view that the decay in breadth is a problem and is not resolved.
So, it is reasonable to say that it’s best to be patient, or at least not have a very aggressive bias for market performance given how narrow it is and how much narrower it is becoming in the U.S., in particular.
For Canada, we see similar things, but not to the extent that U.S. small caps, mid-caps, large caps, and the Nasdaq are doing. Canada’s constituents are in better shape, particularly given how the gold sector has performed. We’re seeing some pause within the gold sector but without really altering its internals. Also, we still see good breadth for financials in Canada as well as the utilities sector in both Canada and the U.S.
I would say that it’s not so much about benchmark indices because on the surface they look good, it’s beneath the surface that market internals are not acting too well, and we need to be mindful of that over the course of the next few weeks.
So, less risk for the TSX Composite Index?
I think if U.S. markets begin to correct, the TSX index will follow suit. I think we just have a better setup in our internals to be able to weather a correction.
Another important technical indicator is the percentage of members of U.S. indices that have declined by over 20 per cent from their 52-week highs. There are two cap sizes that have become problematic in the U.S. Outside of the large-cap indices, market internals for the S&P 400 and the Russell 2000 indices are challenging. As it stands, over 40 per cent of stocks in the S&P 400 have experienced a decline of more than 20 per cent from their 52-week highs. The situation is even more pronounced in the small-cap index, the Russell 2000, where over 60 per cent of its constituents have seen a drop of over 20 per cent from their 52-week highs, which makes the recovery in small caps questionable.
That’s not the best condition you want to see from two major growth indices in the U.S.
Does this suggest that a correction is coming?
You’re not seeing a correction because it’s that narrow five per cent of the U.S. stocks that have been able to carry the index on the upside.
Can that narrow five per cent of stocks keep indices buoyed or are they going to break down as well?
Missing breadth in the uptrend has challenges and I think that could bring some of those large cap names down to more reasonable levels. The market is now paying more attention to valuations.
There is a silver lining that we need to consider. Our optimism stems from the rate of change in the breadth decline within the summation index. It may be reasonable to suggest that the decline in breadth indicators is not a new development, and the rate of change associated with the most recent breadth divergences may be reaching trough levels. We often look at historical trough levels to help us gauge when the market breadth has bottomed out, and where we are today relative to history. While we’re not at extreme levels yet, we are certainly heading in that direction. Should the current pace of decline in breadth continue, I believe we may reach an important low point in November, potentially setting the stage for a year-end rally.
Regarding the breadth trough levels that you are watching for the S&P 500 and TSX Composite Index, is there a way to put that in perspective for readers who do not have access to technical indicators? For instance, would the indices have to fall by a certain percentage to reach trough levels?
The index itself is very much masked by the large cap and mega cap names. When we talk breadth, we are talking about the internals of the market and we try to look at things from where breadth would indicate a trough, and that may not necessarily reflect where the index itself is.
Nonetheless, if you were to look at the S&P 500, levels for us are marked closer to 6,700, that would be a low point, and if we want to bring it lower, we would take it down to levels that we had in October, which are pegged closer to 6,620 or 6,660.
What about for the TSX Composite Index?
The TSX has successfully held its 50-day moving average, which is around 29,844 and is slowly rising – this level represents support. We also note that more stocks on the benchmark have fallen below their respective 50-day average, which may signal additional downside risk. Our downside risk for the TSX is closer to 29,200.
So, potentially a little bit more downside before you would say that this weakness is a buying opportunity?
Yes, I think so. Despite the recent consolidation, the overall trend remains unaltered. On an index level, we are still in an uptrend, and the secular tailwinds for the market remain intact, in our opinion. We’re still talking about deregulation, we’re still talking about spending, we’re talking about global central banks willing to cut rates. So, the secular tailwinds are still favourable for equities and rates are also pretty stable.
It’s difficult for me to make a bearish call at this juncture. It’s clear that the market is undergoing a reset environment, and we may be able to recognize what unfolds post-reset and which sectors will emerge as leaders from potential trough levels.
What is your year-end target for the S&P/TSX Composite Index?
We do assume that we will get a year-end rally.
At this pace of decline of breadth, we should be able to see a trough in November. The subsequent move is higher, and the TSX should be able to at least revisit the recent highs with a marginal new high for the TSX toward 31,200.
And your year-end target for the S&P 500?
7,000 is still a reasonable number to us. I do think that large-cap technology stocks, potentially backed by some of the industrials as well as maybe financials will be able to lift the S&P 500 closer to the 7,000 mark. There, too, we’re positively skewed for a year-end rally.
What sectors might be the leaders into year end?
We still believe that large caps are the dominant leaders of the market. So, even when we establish a low point, I’d like to see whether we can broaden out of just the large caps. But, at least for the time being, we’re not seeing a major broadening out of the large caps at this point.
As to what sectors may be able to lead, we think that tech needs to be part of the equation.
We also think that financials along with industrials will be the runners-up from a leadership perspective, if there’s a rotation.
Then, why do you only have one tech stock in your top 10 basket?
We don’t have a lot of tech stocks in Canada.
The previous month, we had Celestica (CLS-T) and that worked quite well for us. We certainly want to make sure that we’re not choosing names that are extremely overbought in our matrix tables, and Celestica was in a very deep overbought condition. So, we brought Shopify in. BlackBerry (BB-T) was a good contender, but it’s too small cap for us so we couldn’t bring it in.
The month is off to a good start. NuVista Energy (NVA-T), a natural gas play, was added to your Top 10 best ideas basket for November and the company recently received a takeover offer. Staying on the topic of natural gas stocks, do you like them ahead of the winter heating season?
We looked at the 10-year U.S. Treasury yield and there are multiple series of divergences within indicators suggesting a period of positive mean reversion is in the works. In other words, we’re of the view that U.S. Treasury yields have more upside than downside. The downside for the U.S. 10-year Treasury yield is closer to 3.88 per cent, 3.90 per cent, and we recently went sub-4 per cent. Our indicators suggest that the next big move for the 10-year Treasury yield is probably higher toward 4.18 per cent, 4.25 per cent.
We looked back to see what sectors are highly correlated with the reversal in the 10-year U.S. Treasury or mean reversion positive for the 10-year U.S. Treasury, and the energy sector was the one that comes up in Canada, in particular. It is the number one sector that shows positive results when the 10-year U.S. Treasury yield rises.
Within the energy sector, we often highlight natural gas stocks to be better than oil stocks. They just show a better set of readings in our matrix tables, and we wanted to choose one name that was not only a leader but also has good liquidity as well as fundamental ranking and NuVista was the name.
Since NuVista received a takeover offer, if readers want exposure to a natural gas company, what other stock ranks well?
Our runner-up in this category is Kelt (KEL-T), which has shown considerable promise off its recovery low points. Notably, Kelt has consistently reached the upper range of the past four years, which in our opinion may be setting up for a potential breakout.
What is that overhead resistance level that the stock has touched multiple times and may eventually break above?
The stock is once again approaching an overhead resistance level that has historically been in the range of $7.90 to as high as $8. This level has proven to be a strong band of resistance, causing the share price to pause multiple times over the past few years. However, given the improving narrative surrounding natural gas names, I believe Kelt has the potential to eventually break above this resistance.
If you had a top 15 best ideas list instead of a top 10 list, what names might have been included?
I would say IAG (IAG-T). The other one that stands out to us is Brookfield Infrastructure Partners (BIP-UN-T). We also like financials. We have TD on our recommended list. Although CIBC ranks number one within our financial rankings, we have not included it on our list since we don’t cover it fundamentally for obvious reasons. The other ones with high ranks that could have been considered are Bombardier (BBD-B-T), CAE (CAE-T), and potentially Exchange Income (EIF-T), particularly in light of the latest proposed U.S. “Golden Dome” defense project and Canada’s potential contribution to it.
I noticed five banks, CIBC (CM-T), National Bank (NA-T), Royal Bank (RY-T), Scotiabank (BNS-T) and TD Bank (TD-T) are all in your leading quad. The sole laggard is the Bank of Montreal (BMO-T), which is in your consolidating quad. Can we briefly run through the technical outlooks for these bank stocks and start with TD Bank?
For TD, we’re looking at potential upside of $117 to as high as $120. Downside support is marked at $111, $112, so I think that’s a name that does have good risk rewards still given the setup and how it’s ranking is in our basket.
CIBC is still a leader and shows quite well in our work. It’s the highest-ranking financial name in our matrix. Our measured move for CIBC is as high as $120. However, it is difficult to put a precise measured-move target on a trending share price. It may be reasonable to suggest that dip buying is likely to persist if Canadian banks deliver good numbers again. Downside is pegged closer to $114.
Royal Bank has a flat range over the past two months. It’s probably going to stay range bound for a while, but the upside is technically measured towards $210 initially and potentially if we were to extend it $212. Downside support is closer to $200.
Scotiabank has done quite well, slowly getting more overbought relative to the others. You’re looking at a measured move closer to $94 on the upside. We have to recognize that the measured-move calculation is completed and its mean-reversion index is at full capacity. In other words, buying at this pace of momentum may not be an optimal strategy. Downside is pegged at $90.
BMO has been coming off sharply in our matrix. The share price has been declining in both absolute and relative observations. The share price is now below its 10-week or 50-day moving average and it’s one of the only that is actually below the 50-day average and that’s why you’re seeing it stuck in our consolidation quad. The 50-day average would have been support, but because we undercut the average, we can measure somewhat lower on a band that can be projected toward $170. The weakest band is closer to $166; those are my measure move calculations.
Finally, National Bank has been an interesting name. It pauses and refreshes. This stock is performing well and scores well. I have a measured move on the upside for National that is closer to $162. There is good support at $153, which was the area that it broke out from last month. I would prefer CIBC and TD over National if I had to make a choice.
You screen 63 thematic ETFs, and in a recent report you noted that you favour ETFs with a growth and offense tilt for November and December. Can we run through some of these ETFs?
There is something out there for everybody. There are a good number of ETFs out there that can produce not only absolute returns but also alpha, and these are the types of names that I would focus on.
If we go through our ETF basket, semis are still the big leaders, which are the ‘Mag 7’ names. Those are still good names. VanEck Semiconductor ETF (SMH-Q) is ranked number 1 followed by iShares Semiconductor ETF (SOXX-Q).
There’s a solar ETF, Invesco Solar ETF (TAN-A), that’s a good ETF that is now ranked number 3, followed by a uranium ETF, Global X Uranium ETF (URA-A). I often talk about Global X U.S. Infrastructure Development ETF (PAVE-A) and that’s still a very good ETF. BMO Equal Weight Banks Index (ZEB-A) and U.S. biotech and healthcare are showing very well. iShares Biotechnology ETF (IBB-Q) as well as SPDR S&P Biotech ETF (XBI-A) are biotech ETFs. ARK Genomic Revolution ETF (ARKG-A), that’s a good name for us too. So, you pick your spot.
If you had to narrow it down and say these three ETFs have the most attractive charts, which ones would they be?
Historically, biotechs tend to do well when you get a lower interest rate environment in the U.S. So, that’s one area that I would focus on, so either SPDR S&P Biotech ETF or ARK Genomic Revolution ETF.
Second, semis, to me, are still the leaders of the market. I certainly want to continue to focus on semis, even if we get a correction on a backup of a reversal for a rally into year-end.
And then I would also say Invesco Solar ETF.
So, we’ve got semis, we’ve got biotechs and we’ve got solar that are showing well.
Could you give us an update on your global ETF scorecard? What regions rank well and which ones have had notable moves in your scorecard?
From a ranking perspective, we still favour Asian markets, Taiwan, Japan, emerging markets, South Korea and China. These are regions that are sitting at the top of our ranking tables. By some measure, they are very overbought.
Purely based on our matrix systematic process that we have, I still think Asia and emerging markets are the right areas of focus.
The one area that we are seeing a rapid decline is European ETFs. They have been falling off rather rapidly.
Bitcoin recently dipped below U.S.$100,000. What is your technical read on Bitcoin?
By breaking down below U.S. $108,000, a top appeared to have formed, which is likely to continue to weigh heavily on Bitcoin.
Ethereum, on the other hand, looks better relative to Bitcoin because it does not have as much of a top configuration, it is more of a consolidation.
To be fair, maybe Bitcoin is in a consolidation format, too. We do see a stronger technical backdrop for Ethereum relative to Bitcoin. They have both undercut their longer-term averages and this could just be a simple undercut, and give it a week or two, and they may be able to demonstrate a recovery.
Will the Canadian dollar break below 70 cents relative to the U.S. dollar?
There is a very strong band of support for the Canadian dollar at 70 cents. I think it is rangebound, 70 cents on the downside with upside around 72 cents, 73 cents.
Gold stocks were outperformers in 2025. What are your thoughts on the price of gold and gold stocks?
Consolidation is the right narrative for gold stocks. The majority of the indicators became rather parabolic with the price of gold extending north of U.S.$4,200. So, the correction that we’re seeing is more of a mean reversion to a longer-term secular uptrend. A level of support for commodities is closer to U.S.$3,800. We’re not negative. We’re just patiently waiting for an opportunity. Historically, the next best seasonal observation for gold is in December and January.
What key takeaway do you want readers to take away from this Q&A?
We should be mindful that the participation or the breadth of the market is in a very sloppy format. It’s very reasonable to place the bets when breadth readings reach their extreme levels and we’re not there yet. But, over the course of the next few weeks, we see an opportunity to put risk back on. We do think a year-end rally is a likely scenario.
This Q&A has been edited for clarity.