Publication Date: July 16, 2026 · Category: Traders' Insights
Trading weeks 2 and 3 of June were very interesting for us, especially week 2. During that week, the AEX not only surpassed the price target we had calculated for the week, but also exceeded the monthly price target and our upward price target for all of 2026. As a result, within our system, we are without an upward price targetfor the first time in a very long time .
We have been warned
Since 2007, we’ve been using a counting method developed by econometrician Thomas DeMark to determine as objectively as possible whether the market is at a buyable bottom or a sellable top. The idea behind it is what Warren Buffett called: be fearful when the crowd is greedy, and be greedy when the crowd is fearful. The method does not offer infallible timing of tops or bottoms—that doesn’t exist—but we know of no method that comes closer.
The endpoint of the count is always “13.” On the AEX weekly chart, that “13” now appears via two counts (one red and one purple) as a potential top signal. When combined with the achievement of calculated upward price targets at multiple levels, this serves as a warning to investors that the market has become overvalued. A red line on our charts always represents a resistance level, while a green line always represents a support level.
This chart shows the candlesticks for the second week of June, during which the index reached the long-term price target, marked by the thick red line. This is followed by the third week, and the black candlestick indicates that investors began selling off around our calculated long-term peak level, pushing the price below the red line.
Our current view
We’ve statistically analyzed when we’ve seen this combination before: a “13” on the weekly chart, the achievement of both monthly and annual upside price targets, and an overheated reading on the Buffett Indicator. All of these are signs of an overvalued market. Our conclusion after extensive analysis: we must anticipate a market decline of 10% or more; market volatility will increase; and for the longer term, we believe the index still has room to rise.
What this means for RVM Retirement and RVM Strategy
This has little impact on our options strategy, which is market-neutral in both systems. However, with Retirement, in addition to the options strategy, we seek stable, non-cyclical investments for the long term. We are currently finding very few of these. What we would like to buy for the long term is currently too expensive. There are some investments we consider more or less affordable, but they’re currently in long-term downtrends. We don’t buy into long-term downtrends.
For those who still want to invest, an S&P 500 ETF and/or an AEX ETF is currently a defensible choice—in other words, an index investment. But you’ll need to be able to withstand a significant cyclical downturn. Anyone invested in the AEX and/or the S&P 500 is automatically exposed to AI investments, and if that hype runs into a cyclical correction, other underlying securities represented in the index are likely to perform better.
The Positions
Price action was extremely volatile during the week of June 8–12. For two days in a row, we received a short signal on the AEX at the end of the trading day. On Wednesday, a long signal emerged that gained significant momentum. So we held both a long and a short position that week. The SpaceX IPO—and in particular Musk’s speech at ASML, in which he emphasized ASML’s indispensability to his own chip ambitions—led to a stronger-than-expected rise toward the end of the week. As a result, for the first time in about a year, we had to take a small loss on our short position for the week. The long position, of course, performed well.
Week 3 (June 15–19): Calm, Despite the Fed
Week 3 was relatively calm. This was surprising, given that the Fed’s interest rate decision was on the agenda. Historically, a new Fed chair often leads to a negative stock market reaction, as the new chair seeks to distinguish themselves with a “new” vision. That was also the case with Warsh, but the market reacted relatively little. We did see a decline, but not by much. In Week 3, we again had two weekly signals for the AEX—both long and short—and both RVM Retirement and RVM Strategy reached new all-time highs as both positions were closed out at a profit.
In conclusion
A market that has surpassed all its price targets is not yet a reason to expect sharp declines in the long term. Our calculated upside price targets could be broken to the upside. It remains to be seen whether they indicate a resistance level. How we handle this: if we hold an index ETF, we take most of our profits. But if we don’t hold such a position, we’ll mainly observe the market. We’ll see for ourselves whether the long-term price target calculation also turns out to be a resistance level.
What’s the next step?
Curious about how RVM Retirement and RVM Strategy handle a market like this?
