CIBC’s Sid Mokhtari on the stocks and ETFs that should be outperformers - and the two colliding cycles that threaten market complacency

The S&P 500 closed above 7,000 for the first time, while the Nasdaq Composite finished above 24,000, but the article frames the rally as a selective, technically driven market rather than a broad momentum breakout. CIBC technician Sid Mokhtari remains constructive on technology, semis and AI-related names, and sees upside in several TSX holdings including National Bank at $205-$207, Capital Power toward $75, Celestica toward $590, and MDA Space toward $57-$60. He also expects higher volatility into the summer as weak breadth and overlapping market cycles limit the durability of the advance.

Analysis

The important signal here is not that indices are making highs, but that leadership is narrowing into a handful of capital-light, earnings-revision-positive groups while the rest of the market lags. That is typically a late-cycle tape: headline resilience can persist for weeks or even a few months, but the absence of broad participation makes the move fragile to any disappointment in guidance, margins, or rates. In that setup, “good news” in mega-cap tech can keep the benchmark elevated, but it also raises the bar for everything else and increases dispersion across sectors.

The second-order winner is not just semis and AI; it is any adjacent supplier with operating leverage and credible backlog visibility. That favors names like CLS, INTC, DELL, and Taiwan-linked exposure because the market is rewarding evidence that old-cycle hardware can participate in a new-cycle capex wave rather than being structurally displaced by it. By contrast, broader industrials and consumer discretionary are likely to remain funding sources unless they can show their own revisions inflection; that is why stock selection matters more than beta right now.

Banks and utilities are acting as the market’s “quality duration” trade: they benefit if investors keep paying for defensiveness without demanding low growth. But that also makes them vulnerable if bond yields back up or credit spreads widen, because the market is already treating them as crowded relative winners. Energy remains tactically supported by price and revisions, but it is a trade, not a thesis, unless crude can stay elevated long enough for consensus earnings to re-rate upward.

The contrarian risk is that the market is interpreting resilience as durability when it may just be inventorying the last leg of a momentum trade before a breadth reset. If the next 4-8 weeks produce any combination of softer guidance, higher volatility, or a reversal in the AI/semis complex, the under-owned parts of the market will likely de-risk first and hardest. That makes this an environment to own relative strength, but only with tight stops and a bias toward pairs rather than outright index exposure.

Key Decisions for Investors

• Go long CLS on a breakout-confirmation basis, using the prior breakout zone as the risk line; target a 15-20% upside over 1-3 months if semiconductor breadth persists, but cut quickly if it loses relative strength versus SOXX.
• Pair trade long NA.TO / short a weaker Canadian bank or broad financial ETF over the next 4-8 weeks; NA.TO has the cleanest quality/momentum profile, while the short leg monetizes the market’s likely preference for the highest-quality bank during volatility.
• Add tactical exposure to INTC via call spreads or a small common position for 1-2 quarters; the risk/reward improves if the rotation into legacy hardware continues, but exit if the stock fails to hold post-breakout support for more than 2-3 sessions.
• Use CNQ/IMO as a trading sleeve only, not a core overweight; size for a 6-10% upside move over 1-2 months with hard downside discipline if crude rolls over or if energy breadth deteriorates below the 70% support zone.
• Avoid blanket long beta exposure to the TSX or S&P 500 here; prefer a barbell of leaders (CLS, NA.TO, CPX.TO) versus underperformers in the same benchmark, because dispersion is likely to widen into earnings season.