Testy Tuesday – Will the Russell Survive the Death Cross?

Yesterday the Russell 2000 fell 1.2%, below the 50 day moving average and below the 200 day moving average which are about to form a "Death Cross", where the 50 dma moves below the 200 dma and is generally considered to be a bearish sign.  

Of course, we've been telling you for weeks now that the markets were toppy but at least now it's getting obvious.  The Fed may still pull a rabbit out of its ass and goose the markets once again but I very much doubt anything is going to stop the eventual correction now.  Delay, maybe – stop, no.

 If, however, you buy just $2,500 worth of the of the TZA Oct $13/16 bull call spread at $1 (25 contracts), they will pay you back $7,500 if TZA goes up about 15% (just a 5% move up in the RUT) AND they don't lose all their money until TZA is down 10% (a 3% move up in the RUT).  

This is how we teach our Members how to hedge.  As you can see, TZA crossed $15 yesterday and that spread is on it's way to a 200% gain already – a very nice offset against a relatively small drop in the Russell.  This is how we can lean our portfolios just a little bearish and actually…