NEW YORK ( TheStreet) -- When we zoomed into the first quarter, we had a multi-cylinder market.

Smart devices were powering a tech boom. Big exporters were taking advantage of robust economies in East Asia and a renewed Europe that seemed to put its troubled finances behind it. Banks, having paid back TARP, were ready to return capital. Health care, freed from the cloud of regulation, seemed ready to take off.

What a difference three months make. European debt concerns resurfaced and interest rates have climbed ever higher in Portugal, Greece and Spain. North Africa and the Middle East played dominoes, started by political uprisings in Tunisia that dropped into Egypt and then headed for Bahrain and Saudi Arabia before landing in Libya, driving oil up to $100 a barrel in their wake.

An earthquake and tsunami slammed into Japan, causing tragedy and fear in the markets, courtesy of runaway nukes, that was unprecedented. Besides the incredibly sad loss of life, the ensuing destruction seems incalculable given the inability to reach some areas or the isolation of regions affected by radiation fallout.

Major benchmarks have stalled after climbing by double digits during the previous two quarters. Where do investors go from here?

Let's start with where they shouldn't go in the second quarter:

1. China - Chinese inflation has gotten away from the government, something a planned economy can't tolerate. We had escaped any real slowdown from China's interest rate increases until near the end of the quarter when telecom equipment makers Finisar ( FNSR) and Ciena ( CIEN) signaled that business in China was slowing.

Finisar went as far as to say there's a telecom equipment inventory "correction," meaning too much equipment and not enough demand. The guidance cut Finisar shares in half and had a deleterious effect on all the tech stocks that sell to the cellphone equipment and broadband sector.

2. Tech stocks - Tech could have withstood the shock of too much inventory in one country, even one as powerful as China, if it was the only soft story out there. But a growing glut in the tablet computer market will likely create more problems for the industry.

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