RJ Hamster
Another Blare of the Private Credit Alarm
Another Blare of the Private Credit Alarm
BY MICHAEL SALVATORE, EDITOR, TRADESMITH DAILY
In This Digest:
- Blue Owl’s redemption gates are the latest sign to stay cautious
- Up 14.8% while the Nasdaq loses 5.5% – here’s how the Chaikin Flash Portfolio is doing it
- February retail sales beat expectations – here are the stocks benefiting most
Private credit is cracking again, and it’s getting harder to ignore…
This morning, Blue Owl Capital (OWL) – one of the largest money managers in the country with $307 billion in assets – announced that it’s capping redemptions on two of its private credit funds at 5%.
Investors in its $36 billion flagship fund, Blue Owl Credit Income Corp., asked to pull 21.9% of shares in the most recent quarter – more than four times the standard cap.
And its tech-oriented fund, Blue Owl Technology Income Corp., saw withdrawal requests hit 40.7%.
Blue Owl explicitly attributed the surge in withdrawal requests to “heightened market concerns around AI-related disruption to software companies.” Blue Owl’s stock fell roughly 7% on the news.
We’ve been tracking the theme of AI disruption for months now.
Back on March 10, we flagged that BlackRock (BLK) had told investors in its $26 billion corporate lending fund – where redemption requests had come in at nearly double the standard quarterly cap – that they couldn’t have all their money back.
Our Short-Term Health Indicator had already flashed a sell signal on BlackRock before that news broke. The stock is down 12% since.
Today’s Blue Owl news is the same story… only a whole lot louder.
OWL has seen two Short-Term Health Red signals – a volatility-based momentum indicator – in the last six months with Yellow caution zones in between. Since the first one on Sept. 9, the stock is down 52%. And since the more recent Red signal on Feb. 3, it’s down 29%.
The takeaway here goes beyond a potential trillion-dollar blowup in private credit.
It connects to something bigger that every investor needs to understand right now…
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The private credit warning is just one piece of a darker picture…
AI disruption fears, the war in Iran, and isolated credit incidents like this have dominated the headlines in 2026. And each of those things is real.
But we just got a far wider-reaching signal in the Dow – one of the world’s most important market indexes.
Five days ago, the Dow Jones Industrial Average entered a Long-Term Health Red Zone.
Long-Term Health is TradeSmith’s volatility-based trend indicator for major market indexes and individual stocks.
When a stock or index falls far enough from its highs – based on its own historical volatility, what we call its Volatility Quotient – Long-Term Health turns Red. The Dow’s VQ is 9.65%. When a decline from the all-time high exceeds that level, our research shows it tends to lead to further downside.
But this triggered alongside our Bear Market indicator.
This signal fires when a core market index – the Dow, S&P 500, or Nasdaq 100 – enters a Long-Term Health Red Zone at the same time that a significant portion of that index’s stocks deteriorate alongside it.
Over the past 40 years, this signal has issued 11 warnings. Every single one preceded a meaningful market decline. It hasn’t missed once.
And right now, the Dow’s entry into a Long-Term Red Zone looks like the beginning of Warning #12.
The private credit stress, the Financials sector deterioration we flagged in March, and now the Dow’s Long-Term Red Zone – none of these are isolated events. They’re part of the same picture.
The takeaway: Remain cautious and highly selective. The right move now is to focus on stocks that are in Short-Term Health Green Zones, or that have recently turned Green after a period of weakness.
Those are the positions the data is actively supporting. Everything else deserves a closer look – and anything already in a Red Zone has given you your exit signal.
If you want to understand the full scope of this warning – including the 11 prior signals and what history says comes next – TradeSmith CEO Keith Kaplan recently laid out the entire case in a presentation built around this system.
Watch Keith’s presentation here.
In this volatility, one model portfolio is beating the market by 20 points…
We’ve spent plenty of time this year talking about what’s going wrong. Let’s talk about something that’s going right.
The Chaikin Flash Portfolio is up 14.8% since we launched it on Jan. 5– against a loss of 5.5% for the Nasdaq 100 over the same stretch. That’s a 20-point spread in one of the roughest starts to a year the Nasdaq has seen in recent memory.
The strategy behind that outperformance is worth understanding because it shows exactly how two data-driven systems can work together to keep you on the right side of the market.
Here’s how it works.
Marc Chaikin is a 50-year Wall Street veteran and the founder of Chaikin Analytics. Over his career, he managed money for hedge fund billionaires including Paul Tudor Jones, Steve Cohen, and George Soros. He’s best known as the inventor of the Chaikin Oscillator, which appears on professional trading and investing platforms worldwide. More than 800,000 individual investors now use his tools.
His signature indicator is the Power Gauge – a 20-factor rating system that scores stocks on the health of their earnings, revenue, and institutional buying activity. It distills all of that into a simple rating: Very Bullish, Bullish, Neutral, Bearish, or Very Bearish.
TradeSmith partnered with Marc and Chaikin Analytics to build the Chaikin Flash Portfolio around a simple but powerful idea: own stocks in the Nasdaq 100 that are both Very Bullish on the Power Gauge and in a Short-Term Health Green Zone.
The result is a portfolio with strong underlying business quality andtechnical momentum.
That combination is why the portfolio has held up while the Nasdaq has struggled.
In a market where the Nasdaq is down more than 5% and the Dow has just flashed its first Long-Term bear warning in over a year, this is what disciplined, two-factor investing looks like.
Where consumers are still spending – and the stocks showing it…
Iran and private credit have dominated the conversation. But there’s a signal hiding in plain sight that’s worth your attention.
February retail sales came in at +0.6% month over month – ahead of the +0.4% forecast and the strongest monthly rebound since last summer. Department stores led the way at +3%, personal care was up 2.3%, and clothing added 2%.
Yes, this data predates the oil price shock from the Iran war. And yes, the consumer is facing real headwinds. But the momentum in this data is real – and TradeSmith’s screener is picking it up in individual stocks.
Here’s the screen: Stocks in the Consumer Defensive and Consumer Discretionary sectors that have flashed new Short-Term Health Green Zone signals over the past month, across the S&P 500, Nasdaq 100, Dow, S&P 400, and S&P 600.
A few things stand out.
Almost every name on the list is a small- or mid-cap stock – consistent with the relative strength in smaller companies we’ve seen in recent weeks.
Three of the top names are in for-profit, private education: Stride (LRN), Strategic Education (STRA), and Perdoceo Education (PRDO). Academic publisher John Wiley & Sons (WLY) also makes the list. All four are up over the past month – which runs counter to the popular narrative that AI will disrupt education. The momentum tells a different story.
The other cluster worth noting is consumer cyclicals tied to real-world spending. Murphy USA (MUSA) operates gas stations and convenience stores – its 26.6% one-month gain is notable given that high gas prices typically act as a headwind, not a tailwind, for companies like this.
Caesars Entertainment (CZR) and Monarch Casino & Resort (MCRI) are riding the sustained growth in sports betting and gambling as a share of consumer budgets.
And Kontoor Brands (KTB) – the apparel company behind Wrangler and Lee jeans – is up about 9.5% over the past month, corroborating the clothing spending strength we saw in the February retail data.
One stock on the list deserves a closer look before acting: Frontdoor (FTDR). Its Green signal appears to be a reaction to a strong Feb. 26 earnings report that sent shares up more than 16%. Since then, the stock has given back all those gains and then some. That’s a reminder of why recent price action matters alongside any fresh signal.
The one large-cap on the list is Airbnb (ABNB), which flashed a buy signal more than a week ago – though it’s down about 7.3% over the past month, making this potentially a stock to buy at a discount, rather than chase.
In a market where the major indexes are under pressure and the obvious large-cap names are in the Red, this screen shows where fresh momentum is actually building. Add these names to your watchlist in TradeSmith Finance and let Short-Term Health tell you when to act – and when to exit.
To building wealth beyond measure,
Michael Salvatore
Editor, TradeSmith Daily
