In today's market landscape, where North American equity markets continue to surge, reaching new heights, it's crucial to stay informed and make strategic investment decisions. I had the pleasure of speaking with CIBC's chief market technician, Sid Mokhtari, who shared his insights and expertise on identifying top-performing stocks and navigating the current market trends.
Navigating Market Momentum
Mokhtari's technical analysis of the market momentum reveals a strong upward trend, with both the S&P/TSX Composite Index and the S&P 500 flirting with record levels. His monthly report, which includes his top 10 stock ideas, has consistently outperformed the S&P/TSX Composite Index for the past four years, showcasing his ability to identify stocks with strong technical and quantitative characteristics.
Building a Successful Portfolio
When constructing his monthly Top 10 portfolio, Mokhtari employs a unique pricing strategy. He calculates the buy price by taking the average of the intraday high, low, and closing price on the first business day of the month. Similarly, he determines the sell price by averaging these values on the last business day. This approach allows him to manage profit and loss effectively.
Mokhtari also emphasizes the importance of sector diversification, ensuring a minimum of four sectors in his portfolio. Historically, he has capped the number of stocks in a given sector at four, maintaining a balanced approach.
Macro Influences and Model Focus
In his stock selection process, Mokhtari considers macro influences by analyzing an asset allocation matrix. This matrix helps him identify assets that are gaining traction and understand the factors impacting their performance. However, his primary focus remains on the quant and technical rankings within his models. By recognizing overbought conditions, he mitigates risk and concentrates on improving and leading quads within his matrices.
Income Investments and Recommendations
For income investors seeking stable investments with attractive yields, Mokhtari recommends several options. He highlights the AGF Enhanced U.S. Equity Income Fund, which targets a 7% yield and pays income monthly. Additionally, he suggests the J.P. Morgan U.S. Equity Premium Income Active ETF, known for its high yield of 7-8%, but investors should be aware of withholding tax implications. The Middlefield Real Estate Dividend ETF is another recommendation, offering a good yield with an active management style in the REIT space.
Top Picks and Market Insights
Mokhtari's top picks include Brookfield Renewable Partners LP and Brookfield Infrastructure Partners, both of which have performed well in his technical analysis. He highlights the strong technical aspects of BEP, including its measured move potential and supportive volume readings. Additionally, he advocates for investors to consider Accenture (ACN), which, despite being under pressure due to the AI narrative, is in a late-stage decline and may offer opportunities for investors seeking market inefficiencies.
Stock-Specific Insights
When asked about BlackBerry (BB) and Telus (T), Mokhtari provides valuable insights. He explains that BlackBerry has broken out of a sizable base, with potential to reach as high as US$7.70 to US$9. Although overbought, the stock has cleared resistance bands, creating a favorable environment for trend followers and breakout investors. Telus, on the other hand, is considered a late-stage decline, with limited downside risk. Mokhtari favors Rogers, Quebecor, and BCE within the telecom space.
U.S. Stock Ideas
For U.S. stock ideas, Mokhtari recommends Nvidia (NVDA), which is poised to break out of its range. He suggests that investors seeking exposure to the chip and semi-conductor industries should consider NVDA, with potential upside targets of US$240 to US$278. Apple (AAPL) is another pick, as it prints weekly and monthly buy signals and tends to consolidate before re-accelerating. Mokhtari highlights Eli Lilly (LLY) as a stock that has been rebuilding itself technically and quantitatively, with strong fundamental backing and potential upside to US$1,100 to US$1,180.
Conclusion
In this interview, Sid Mokhtari provides a wealth of insights and recommendations for investors navigating the current market landscape. His technical and quantitative approach, coupled with his expertise in identifying market inefficiencies, offers a unique perspective on income investments and top U.S. stock ideas. As always, investors should conduct their own due diligence and consider their risk profiles when making investment decisions.
