Yesterday, investors loved cyclicals and hated tech. This morning they loved tech. This afternoon, they liked everything.

Which trend is likely to dominate the market in the next few months? It may well be the last one.

During the last several sessions, investors have bought into sinking blue-chip industrial stocks while rotating away from technology. The intense rotation was motivated by investors' desire to get rid of stocks viewed as overvalued based on the assumptions of slowed, yet still strong, economic growth and

earnings.

The question now is whether today's action is a harbinger of similar days to come. Some think it is. A sober conservatism has emerged in the market in the last couple of months, with investors leaning toward blue-chip stocks. But, if investors believe the economy is going strong, more days of tech strength will follow. And that's the big "if" -- the economy.

Renewed Interest in Smokestack Stocks

A lousy spring and lackluster summer gave way to a horrid September and October for technology shares. Investors continued to ply their trade in the

Nasdaq, hoping those stocks would regain some of the bounce displayed in 1999. But earnings warnings from major technology companies, including

Intel

(INTC) - Get Report

and

Dell

(DELL) - Get Report

, and mildly disappointing revenues in spots pushed investors aggressively away from technology shares into blue-chips.

The culmination of this took place last week, when investors finally shelled the networking, software storage and fiber-optic stocks like

Juniper Networks

(JNPR) - Get Report

,

EMC

(EMC)

and

Ciena

(CIEN) - Get Report

, and bought up new

highfliers

like

Alcoa

(AA) - Get Report

,

Ryder

(R) - Get Report

and

TheStreet Recommends

Illinois Tool Works

(ITW) - Get Report

.

With the exception of mutual fund tax-loss selling related to the Oct. 31 end of the fiscal year, valuation was the primary factor in the shift toward tried-and-true and away from the black-and-blue.

It wasn't just a nontech thing, either; the desire for stocks with attractive

price-to-earnings ratios was evidenced by strong buying in

Microsoft

(MSFT) - Get Report

and Intel last week. By mid-month, Microsoft traded near $50, lowest since October 1998, and Intel fell below $40 for the first time since early this year.

"Going forward we're going to see a more egalitarian market," said Joseph Keating, chief investment officer of

Lyon Street Asset Management

in Grand Rapids, Mich. "The key for investors is to take this downturn and view it as a buying opportunity into the market."

The move in those stocks presaged some of today's movement in the technology stocks with higher valuations.

Cisco

(CSCO) - Get Report

rallied sharply today, after closing yesterday below $50 -- its worst level since last December.

The message in that technology buying is that investors still believe in growth stocks. Up until a few days ago, their dominant sentiment leaned toward a significant economic slowing. That seems to have diminished, due to recent economic data showing continued strength in consumer spending. In September, housing sales rose at their fastest pace since February, interest rates have dropped, and retail sales are still strong.

Tech Spending an Issue

Chuck Carlson, portfolio manager of the

Strong Dow 30 Fund

, believes the market's activity may favor

NYSE stocks rather than Nasdaq due to uncertainty regarding the future pace of

business spending on

technology equipment.

There's some concern that declining demand from failing dot-coms will retard technology spending, and that's certainly possible. But there are some significant spending needs from old-line companies, and Carlson believes concerns of slowing tech spending will ultimately rid themselves from the market. For now, however, he thinks the smokestack companies will show stronger gains.

"In six months, I don't think

yesterday is going to be the case, but for two months, I wouldn't be surprised," Carlson said. "Ultimately, I think investors come around to earnings growth. In the fourth quarter or first quarter, when the fears about tech growth aren't realized and people feel comfortable putting money back into that market," it'll strengthen.

In addition, valuation concerns are more likely to assert themselves in technology. Despite what investors see as a more conservative investing environment, Juniper managed a 17.2% gain today, and quickly added back more than $8 billion in lost market capitalization. Potholes are more likely to trip up these stocks; Cisco reports next Monday, and all is expected to go smoothly, but any hint of disappointment could cause a derailment in tech land.

Joker, Joker, Joker!

As always, the economy is the wild card. The current thinking in the investment community is that growth, after slowing for two straight quarters (second-quarter

GDP

was skewed upward by government spending), is reaccelerating. Until there's confirmation of that, though, the gains in the market may be tentative, and away from all but the largest technology stocks.

If the economy is tripped up as well, and continues to slow, defensive stocks may well reassert themselves.

Senior markets editor Ellen Braitman chats with Christopher Edmonds, columnist for RealMoney.com, exclusively on TheStreet.com at 3 p.m. EST on Wednesday, Nov. 1. Join them with your market and investment questions by logging on the home page.