Publication Date: July 16, 2026 · Category: Traders' Insights
The AEX was down significantly last week, by -1.62%. What was the reason?
Assessment and Plan
First of all, we must acknowledge that price movements are unpredictable, regardless of the timeframe you’re looking at, and that, as we often say in this business: “Any reason is good enough to make the market rise or fall.” Our price target calculations are therefore never a prediction; they provide a roadmap and a set of rules we must follow. “If A happens, we must do B, and if C happens, we must do D.” We always know what to do with our options strategy; that’s actually determined right at the start of a trading period.
There’s a classic chess textbook by Max Euwe that I studied as a young chess player at age 13 and used as a guide to improve my chess. The title: “Judgment and Plan.” In fact, this is exactly what we do with these systems: every day, at the end of the day, we form a judgment based on what we see, and then we execute a plan. In our case, this plan is already set. We just have to wait for “the facts.” Once the facts are known—in our case, prices—we can form our judgment and carry out our plan.
This sounds simple in theory, but the stock market is a more unpredictable opponent than any other chess player, so unfortunately there are never certainties, only probabilities.
The Week’s Performance for the AEX and Microsoft
The index had a positive Monday, and on Monday our trend signal was long, so we took a long position. On Tuesday, that changed to a short signal, so we took a short position on Tuesday. As always, the option strikes were already set and are based on calculations made earlier.
For the rest of the week, we hovered around Tuesday’s low prices, with Friday ultimately marking the week’s low, though there was a recovery toward the end of trading—which was in line with what we also saw on Wall Street, for example with Microsoft.
Microsoft has been extremely volatile in recent weeks and months, and has been negative on balance. It is also one of the world’s most important companies, and for a long time it was our fundamental “play” at Retirement, so we keep a constant eye on Microsoft to see if an upward trend reversal is on the horizon.
In our charts, a green line always represents calculated support, and a red line always represents calculated resistance. For a long time, the long-term downside price target we calculated for Microsoft was not reached, despite the sharp decline. But last week we came very close—take a look:
You can see that on Thursday we nearly reached the calculated level of 348.47. On Friday, Microsoft rebounded very strongly. This is interesting because buyers entered the market at the support level we had calculated months ago using our algorithm.
Should we have placed a permanent buy order at 348.47? It doesn’t quite work that way. We often see that calculated support zones don’t “hold.” Think of Adobe, Nike, Wolters Kluwer, and PayPal: major companies that have crashed on the stock market and are trading well below our calculated long-term support zones. A break below calculated support levels can be a sign of further decline. That’s why we primarily use the green lines to observe what happens to the underlying value at those levels.
What we often see
We often see that calculated support levels initially present buying opportunities, and the hope is that this might actually mark a bottom. However, what is equally significant statistically is that the support line is subsequently broken, and that can be a very bad sign. So we’ll have to wait and see with Microsoft, especially since we expect the entire market to experience a decline of at least -10% at some point this year.
The AEX last week
On a weekly basis, it was also interesting to see what happened. This is the hourly chart from Tuesday morning through Friday at 5:30 p.m. Note the calculated support line, the green line:
The black candlestick on Tuesday morning was the result of a very sharp overnight decline in Asia and in U.S. futures, particularly the Nasdaq. A calculated support level is, first and foremost, exactly that—support—so buyers entered the market. The same thing happened on Wednesday around our calculated support level. On Thursday, buyers attempted to push the price through the yellow line—which we consider the most important level each week, the so-called “pivot.” It appeared to be working until the U.S. market opened at 3:30 p.m. and a sharp sell-off occurred. On Friday, the support level was broken, and the price reached the blue line—the 200-period moving average (MA200) on the hourly chart. The first time the MA200 is tested, it typically acts as a support level, and that’s exactly what happened: by the end of the day, we were trading above this average again.
Conclusion
The system worked well enough, as we operated very cautiously, as always. The larger trend on the AEX is now downward according to our parameters, but that says little about how next week will unfold. A weekly trend can very well be positive, even while the larger trend is not.
The long-term calculation
To show you why we’re currently extra cautious, here’s a section of the AEX weekly chart with the calculated long-term resistance shown as a thick red line.
Two weeks ago, you can see that the AEX broke through the red line with a massive upward move. For us, that was not a reason for optimism, but rather for pessimism: the first time a calculated resistance level is broken, the probability that the rally will continue is low. Over the past two weeks, we’ve seen the index decline, ultimately falling to a level below the long-term calculated upside price target. You’ll also notice a red 13 and a purple 13—a signal we sometimes see only once every two years. The upward-pointing “13” on a weekly chart indicates that there is a high probability the uptrend will run into trouble at the index level. However, we have not yet seen a lower weekly high, so for now this is simply a struggle with a resistance level.
We once again had a week with two signals and thus two positions. The weekly result for RVM Retirement and RVM Strategy was positive, compared to an index that closed 1.62% lower.
