Hey trader,
Friday morning was a “cell program”...as in a prison cell.
Private credit funds are trapped in a $5 billion cell right now as investors rush for the exits.
That headline alone told me everything about where this market is heading.
Most people think the market is falling because of the war. The war is already priced in.
The real driver is credit. Private credit funds are liquidating stock positions to fund redemptions back to their investors.
That mechanism will not stop until the credit pressure is relieved. This weekend, I want to walk you through something most traders have never studied.
The Straw That Breaks the Camel's Back
Every market cycle has a proximate trigger. There is always one straw that breaks it.
In 2001, it was the internet bubble. In 2008, it was housing, and in 2020, it was COVID.
In 2026, the trigger is private credit.
I have been posting about the credit cycle every day. I own zero bank stocks because I do not know how deep the exposure runs.
The names involved are not small players. Blue Owl, BlackRock, and Blackstone are all handcuffed.
They are getting redemption requests and cannot release the money. They are liquidating equities to fund credit obligations, and that is why your screen is red every morning.
A French Physician Saw This Coming in 1862
His name was Clement Juglar. He was a French physician and statistician who identified something Wall Street still refuses to accept.
Juglar described a medium-term business cycle lasting seven to 11 years, driven entirely by the ebb and flow of credit through the economy.
He identified three phases: prosperity, crisis, and liquidation. I placed us between crisis and liquidation on Friday's broadcast.
- All that credit over the last few years funneled into AI, quantum computing, and data center buildouts. Companies went to private debt because it was cheaper than public debt, and now the bill is coming due.
- The Juglar cycle is supposed to bottom around 2026 to 2027. We are sitting in the phase where credit is being sucked out of the market.
- A 2010 study using spectral analysis confirmed the presence of Juglar cycles in world GDP dynamics. The framework has been validated against over a century of data.
I wish I had taught this three months ago. I go chronologically through my curriculum, and the Juglar cycle came up this week.
If I had covered it in January, many of you might have avoided buying the S&P at the top. That is my one regret.
What the Numbers Tell You Right Now
Money managers are trained to sell into weakness and buy into strength. Algorithms are programmed identically, and when both forces align, you get what I call a bifurcated meltdown.
Stocks with P/E ratios of eight are still being sold. RSIs are sitting at zero on the weekly and monthly charts.
Meanwhile, utilities are trading at 30 times earnings because money managers need something positive to show clients at quarter end. Technology trades at eight times earnings, and they are still dumping it.
My only financial holding is PayPal at a P/E of eight, a potential takeout candidate. That is as far as I will go.
Where It Ends
I believe there is a bull market ahead of us. The Juglar cycle tells me we need more time for the credit to work through the system.
If this market corrects 15% to 20%, I would become the biggest bull at TheoTrade. We are not there yet.
The Genesis COG System tracks when credit pressure exhausts itself and institutional buying returns. When the Juglar cycle bottoms, the system will show it first.
Think about markets by time, not by price. Kitchen was inventory, Juglar is credit, and both say the bottom is not here yet.
Have a good weekend. Protect your capital, because the opportunity is coming.
Professor Jeffrey Bierman
Creator of the Genesis COG System