The lack of momentum that undermined Monday's market strength is having a greater impact this morning. The Dow Jones Industrial Average is in negative territory, the S&P 500 has given back its opening gap and the Russell 2000 ETF (IWM) is finally pulling back after a strong move over the last couple weeks.
Breadth is still positive with about 3,950 gainers to 2,600 decliners but if you are looking for pockets of strength they are difficult to find. The best action is in semiconductors, which was triggered by the Micron Technology (MU) buyback announcement and some target increases.
One name in the chip sector that I added this morning is Ichor Holdings (ICHR) . This has been a value trap that hasn't been able to move despite being extremely cheap. In its March quarter, earnings per share increased 81% to $1.03 and revenues were up 74% over a year earlier.
ICHR is expected to earn $3.85 per share this year and $4.35 in 2019, but it trades with a trailing 12-months P/E of just 8. The problem is that ICHR has a lousy chart and there isn't much interest in waiting for the market to figure out the story.
The little momentum that does exist in this market is undermined by the lack of vigor in the FAANG names and other big-cap technology. If that group can't generate more strength on the China news than what will? Strength in chip stocks is a good sign but it's too limited to be notable at this point.
We aren't seeing any severe selling pressure but there just isn't enough buying interest to attract more aggressive buyers.