$SPX | S&P 500 Large Cap Index INDX - 3/24/26

The HCM-BuyLine® turned negative on Friday, and we reduced exposure to equities into yesterday’s rally. The trend has turned down, and fighting the trend is a losing battle. We will increase exposure to short-term bonds and cash until an uptrend re-establishes itself. Some have been calling yesterday’s move higher a big positive, but I see it another way. I found the rally to be very weak and benign, and thought it looked like it was a lot of short sellers covering their positions. In other words, no real buyers coming in. If we break 6530 on the S&P 500, which is the next level of support, we could see a selloff to the next level of support at 6140.

We have been trading sideways for about 8-9 months now. Oil jumping up due to the war in Iran is one of the causes of the selloff, but what I think is equally important and needs to be watched is what is happening with private equity. A lot of money has been invested in private credit, and it is tied up, meaning it is not liquid. I have always preached to stay away from non-liquid investments, and this is one of the main reasons why. There are a lot of investors trying to get their money back with limited success. What happens is when they can’t get their money out, they start selling their liquid investments, i.e. stocks and bonds, and pushing prices lower.

There have been a lot of private loans made with the expectation that AI will change the world overnight, and all their loans will lead to huge profits. I do think, as I am sure everyone does at this point, that AI will make things more efficient. But after that will it spoon feed us while we do nothing every day? Probably not. So has AI been oversold to all of us? There is a reason large investors want their money out of the private loans that are being spent on AI and data centers.

I’m still bullish in 2026 and will be patient and wait for the trend to turn back up before we start buying.