It looks to me as if the tech stocks you’d expect to do very well in an environment like this have actually been doing poorly. You know, Apple (NASDAQ:AAPL) has been down most of last week, Intel (NASDAQ:INTC) closed down 0.5 % on Friday and the big bank stocks like Bank of America (NYSE:BAC) and Citigroup (NYSE:C) also fared poorly after weak earnings. And yet the market is still forging higher.

Opportunity in AmBev

The decline in tech stocks is very disappointing, but it reflects what is happening in technology across the board.

The tech industry more than any other just consumes itself as products are copied and made cheaper, ruining carefully created business plans. I was just reading about a new “computer on a stick” that Dell (NASDAQ:DELL) has introduced that costs around $50. You put the stick in the HDMI port of a new monitor and it connects to a keyboard and mouse through Bluetooth and to the “cloud” for storage and programs. If that catches on, you can see how Dell would go from selling $4,000 computers 10 years ago to $500 PCs last year to maybe $50 computers in two years.

This is what makes tech exciting and scary, and causes disruptions that bedevil investors. Contrast it with a company like Companhia de Bebidas das Americas (NYSE:ABV), a Brazilian soda and beer bottler and distributor more commonly known as AmBev. AmBev probably has not changed the cost of its leading sodas much in the past five years and probably won’t change them in the next five years.

I’ve had a lot of success trading ABV in my Trader’s Advantage

service and I plan to circle back to it at the end of this month or early February. Keep an eye on the stock for an attractive entry point on dips.

Reason for the Rally

So what’s next? My theory is that the reason the S&P has been looking bullish despite weakness in tech that is that it’s getting a lot of energy, from, well…energy. It’s a group that was left behind last year severely underperforming the market, but it’s really turned around and moved higher. When you get the big companies like Chevron (NYSE:CVX) and Exxon (NYSE:XOM) pushing higher, really interesting and important things start to happen.

Another stock that has moved higher than its peers in the Dow is Travelers (NYSE:TRV), a big insurance company that reports earnings today, and also Home Depot (NYSE:HD), which has turned around its fortunes. It was flatlining at the first part of this year but now it’s moving higher as well. All of that combined has brought the S&P to a new five-year high.

Now I think that going forward a lot of the ebullience we’ve seen is going to be flattened a little bit. That’s what the volatility trends are suggesting. Nothing severe, but I think we could be in for a period of two to six weeks when volatility rises and the market flattens out, giving us an opportunity to get long ahead of the rest of the year. And if there is a big setback as a result of the debt ceiling debate, I think it will be seen as a buying opportunity rather than the potential for a 15%-20% decline.

InvestorPlace advisor Jon Markman operates the investment firm Markman Capital Insight. He also writes a daily swing trading newsletter, Trader’s Advantage which aims to capture profits of 15% to 40% and often as much at 100% to 200% in less than 90 days. 

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