Canadian stocks are heading north, and one trader sees even more gains

President Donald Trump's meeting with Canadian Prime Minister Justin Trudeau this week may not be the only thing diverting eyes north of the border. The country's stock market has been ripping higher.

The S&P/TSX Toronto composite is up nearly 30 percent in the last year, far outperforming U.S. equities.Oppenheimer technician Ari Wald believes Canadian stocks may go even higher.

"What you'll notice about it is the [TSX] index is really round trip from where it was back in the summer of 2014," Wald said Monday on CNBC's "Power Lunch." "After a pretty deep sell-off, we're right back at those levels, pushing out to new highs, and breaking above that resistance."

Wald also said the rising 200-day moving average on the Canadian index indicates a "bullish trend" that is likely to continue, as the marker hints at higher lows and higher highs. "This is really also all within our more macro thesis that global breadth is broadening here," he concluded, touching on the rally in non-U.S. stocks.

Erin Gibbs, chief investment officer at S&P Global, not only likes the current valuations of Canadian stocks, but thanks to the heavier weighting of energy and materials on the index another rally could be on the way. More specifically, Gibbs believes that if the U.S. and Canada move ahead with the construction of the hotly debated Keystone Pipeline, the heavier weighting of energy and materials stocks on the TSX composite could pull the market even higher.

"As long as energy prices remain fairly stable, we're positive," she concluded. "Plus valuations look pretty decent here."

Canadian stocks have rallied 3 percent year to date while the S&P 500 is up about 4 percent.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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