Dear followers of RVM Strategy,
Here is the overview of the four weeks of October that are now behind us. We waited a while before compiling this overview because we needed clarity regarding the macroeconomic outlook and broader trend developments. Our positions are currently focused on the longer term. While clarity regarding the trend—or a trend reversal—is still lacking, the report needed to be prepared now.
France had been experiencing budget problems for some time. The CAC 40 was in a terribly weak trend, and yields on French government bonds were rising: investors were demanding ever more collateral before lending money to France. There was no sign of this on the AEX—until the first trading day of October. Right in the first hour, our calculated support level for October, 1,102.16, was breached.
This was a market shock, and we were forced to hedge a weekly position—that is, to buy protection against a decline on the AEX. Our calculated range for the month is typically tested at the beginning of a new month.
For those who also follow RVM Retirement: there was another weekly position there, and it wasn’t necessary to buy protection right away. In that case, we could wait until the end of the day. If the closing price had been below 1,102.16, insurance would have been purchased there as well, because that is how our system works. However, the index held our calculated support level at the close (though not intraday), and therefore the two systems adopted different AEX strategies from that point on.
Because the support level held at the daily close, the purchased hedge could be hedged on the same day, as well as on the following trading day. The first trading week ended with:
The fact that the AEX maintained its trend-long signal, while the CAC 40 and the German DAX were much more negative, is exceptional. It was as if the Netherlands had a completely different economy than France and Germany. The AEX stood out, and that is still the case now, at the end of October.
Nevertheless, we continue to expect the AEX to experience an even greater decline for the remainder of 2026. This is a cyclical forecast, based on wave structure and statistics. If that decline fails to materialize, it would be highly remarkable, though anything is possible. From the moment the position was opened, we have regarded the hedge as a sleeping giant.
This was a good week for the AEX. The trend-long signal remained in place, and the weekly position established in Week I as a hedge yielded the largest profit so far in 2026 among weekly positions. That profit was also necessary to acquire the hedge at a better price.
The put spread was further hedged and converted into a ratio put spread. From the moment it was established, this has been a form of long position: its value increases as the AEX rises. That’s not the whole story, however, because the highest value is actually reached when the AEX is lower around expiration.
It is therefore a flexible position, and the current value is of lesser importance. The holder must look well ahead to expiration, in this case in November. Until then, the current trend signal and the monthly calculation will determine whether the position should remain unchanged or be adjusted.
In Week III, the AEX reached the calculated monthly upward price target: 1,140.13. We took profits on the trend position, the iShares AEX ETF. Since 1,140 was also the price target for the entire year of 2026, we added a callback spread to the current position. If 1,140 turns out to be a peak, we’ll also benefit from a falling AEX.
In Week III, the AEX rose above all calculated levels for 2026Calculated levels by RVM Strategy, in index pointsOvertime: above the projected annual high1,147.001,140.131,102.161,067.00Monthly and annual price targetCalculated support level for OctoberCalculated 2026 annual highHighest level in Week IIIThe actual annual high was calculated at 1,067. Once that level was reached earlier this year, the index entered a sort of “overtime” phase from a quantitative perspective. It could certainly go higher, but that would create disharmony.
Anyone who studies long-term charts can see that stock market waves are primarily a psychological phenomenon. When a certain sentiment prevails—for example, a positive one—there comes a point where the wave motion is no longer harmonious, and we see a sharp spike. No matter how long it takes, the movement eventually becomes harmonious again: either by moving sideways for an extended period or by entering the downward phase of the cycle. You can’t predict that, but our range calculations help put it into perspective.
From the moment 1,067 was reached—the last point at which the AEX was in harmony with the calculations—1,140 immediately became the next and ultimate level. This is related to the projected annual closing price of the index.
Ultimately, the AEX rose even higher in Week III, to 1,147. Very impressive and strong, and with that, we were above the maximum calculation for 2026. The upward price pressure was clearly driven by the October expiration.
Last week, the index was slightly lower, and a trend short signal emerged on the AEX. Our position is reasonably well-suited to this scenario. A weekly position was therefore not an attractive risk, and we also do not have much margin room for it.
The combination position we currently hold as an open position performs best in November at a price between 1,080 and 1,075. Below that, the value decreases at expiration, and so does it above that level, although the outcome would still be better than the current level. Above 1,160 at expiration, it would again be too much of a good thing.
Of course, we’ll adjust the position or add new positions when the calculations and the main trend allow it.
The closed positions from Week I through Week IV collectively yielded a profit of €342.58.
Four of the five closed positions were profitableResult per closed position and totaled, in euros. Green = profit, red = loss+ €11.69+ €38.69+ €228.69- €14.31+ €77.82+ €342.58Position 1Position 2Position 3Position 4ETFTotalOptionsOptionsoptionsoptionscompletedthrough Week IVThat concludes the strategic overview. See you at the end of the week for the weekly overview of Week V.
Best regards,
Ruud