Can the TSX go even higher? Yes, says this analyst

Paradigm Capital analyst Aazan Habib noted in his latest Rotation Report (Oct. 23) that the S&P/TSX Composite Index has reached his long-standing 30,000 target, suggesting the market is now entering a consolidation phase before resuming its primary uptrend toward 38,000–40,000.

While long-term momentum and breadth indicators remain positive, Habib noted that the rally has left conditions overbought, particularly in the gold miners and banks—two groups he continues to recommend holding as core positions but “allowing them to breathe” near term.

“Key support sits at 27,200, then 26,000,” he said, adding that breadth remains strong with about 84% of TSX constituents trading above their 200-day moving averages, a sign of underlying market health despite near-term fatigue.

A notable development this quarter, Habib said, is “the flippening”—the materials sector overtaking energy in index weight for the first time since 2020, driven by what he calls the “Fabulous Five” gold producers: Agnico Eagle Mines, Barrick Gold, Wheaton Precious Metals, Franco-Nevada, and Kinross. Together they now account for about 7.2% of the TSX Composite.

Paradigm’s multi-factor quant models remain dominated by gold names that “score highly on growth, momentum, and quality,” though Habib said he now sees better entry points in copper miners, which are “starting to look like gold stocks did in 2024” and could represent the next leg of the commodity rotation.

Habib described energy as a “contrarian buy,” citing improving sector breadth and support in WTI crude near US$55.00 While his models have yet to confirm a sustained trend reversal, he said the group could “move into the upper echelon” of sector rankings in the coming months if momentum continues to build.

The October update ranks materials and financials at the top of the TSX sector hierarchy, followed by utilities, technology, and energy. Industrials and real estate slipped in ranking, while consumer staples and health care remain the weakest groups on a relative momentum basis.

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