| Think of broad market hedging like zone coverage in football. You're not covering one specific player - you're protecting an entire area of the field. The easiest way? Inverse ETFs. The ProShares UltraShort QQQ (QID) gives you two times the downside movement of the Nasdaq 100. If the tech-heavy index drops by 1%, QID rises by about 2%. No options approval needed, no Greeks to understand. Here's how it works in practice: to protect 20% of a $100,000 portfolio, buy 10% of that value in QID. If the Nasdaq 100 hits that 580 level I'm watching, your QID position should be up about 8% while the market's down 4%. One catch: Inverse ETFs aren't buy-and-hold vehicles. The derivatives they use to create that synthetic short mean time decay eats away at the position if you hold too long. The Scalpel Method: Options Precision If you want to get more surgical, use a scalpel. Three weeks ago, my colleague Karim laid out a long-dated hedge setup using January 2025 SPY options - the 680/600 put spread. This strategy starts protecting at SPY 680 (we're at 685 right now). It costs about $14 per spread and provides $80 worth of protection if we hit that 600 level. That's a potential $66 profit per spread if we see a real correction. It's designed to protect against a broad market drawdown over the next 10 months. You're buying term insurance for your portfolio with a specific expiration date. Why Round Numbers Should Worry You Dow 50,000 is a psychological level, not a fundamental milestone. The rejection we saw right after hitting 50K? That's telling. Round numbers act like magnets in both directions. They attract price action on the way up, then become resistance on the way down. The same thing's happening with the Nasdaq 100 at 600. We've tested it multiple times with progressively lower volume. That's not accumulation - that's distribution. When 600 finally gives way, we've got a clear path down to 580 support. Managing Your Insurance Policy Market hedges require active management of the "what's next" question. When my QID hedge hits its target - say we get that 5% Nasdaq drop I'm expecting - I'm asking: Is this a healthy correction or the start of something bigger? If it's a healthy correction (8-10% total pullback), maybe I take profits on the hedge and buy the 200-day moving average. If the VIX is hitting my 28-30 zone and we're seeing real panic, maybe I add to long-term positions while others are running for the exits. Your hedge success isn't just about being right on direction. It's about having a plan for what you do when you're right. Your Action Plan Right now, with euphoria around Dow 50K and technical indicators showing negative momentum, insurance looks pretty cheap. Whether you use the hatchet (like the QID) or the scalpel (like the SPY), the key is having a plan for all three questions. For more insights like these, check out our new YouTube channel. | 
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