Stocks Rise, Despite Sequester Scare
NEW YORK (TheStreet) -- Major U.S. stock averages resumed their upward climb Friday after briefly stalling during President Barack Obama's press conference on the sequestration deadline, as better-than-expected manufacturing and consumer sentiment data trumped the President's warnings about the $85 billion in automatic spending cuts.
The Dow once again moved towards its all-time high of 14,164 as the VIX fear gauge fell 1.87%.
Despite the recent strength, Hugh Anderson, HighTower's Las Vegas managing director and partner said his team is telling its clients that the market remains in a secular bear market, where risk- taking isn't being adequately compensated.
"Like it or not we are in a Fed-driven market which has distorted normal market behavior as it relates to valuations and market cycles," he said. "Periods of low volatility like we've enjoyed for the last six months are followed by periods of higher volatility, so be prepared."
Anderson said that insider sales have been 12 times greater than insider buys of late and that negative earnings guidance is four times more frequent than positive earnings guidance in the most recent quarter.
"Data points like this tend not to shine as brightly as a market that has enjoyed a rally without a 10% correction for over 500 days."
He advised sticking with stocks that have the highest quality balance sheets, stable earnings, a history of uninterrupted dividends coupled with a history of growing those dividends. He suggested making "tactical" adjustments as needed, taking advantage of periodic bouts of instability, and to be contrarian "as best as human inclination allows."
Anderson added that while bear markets are the best time to "buy low," regrettably, the Federal Reserve has made those opportunities frustratingly infrequent.
The Dow Jones Industrial Average rose 35.17 points, or 0.25%, at 14,089.66. The blue-chip index closed up 0.64% for the week. The S&P 500 was up 3.52 points, or 0.23%, at 1,518.2, and finished the five-day period up 0.17%. The Nasdaq was up 9.55 points, or 0.3%, at 3,169.74. The tech-heavy index rose 0.25% for this week.
Sector action was mixed in the broader market. Transportation, healthcare and services shares were among those edging higher. Energy, basic materials, capital goods and conglomerates were retreating.