All USA main indexes close February with a great run above all pivots. But today was the most threatening bar for VIX since 10/27-28. That said, put things in perspective - it is just VIX above a monthly pivot and usually it takes a quarterly level to really change the trend.

There are three basic ways to outperform the market - and let's define that as SPY.

1. Be long indexes or sectors (or stocks, if time permitted) that are outperforming SPY
2. Be more long when SPY is going up; ie, leverage
3. Be less long when SPY is going down; ie, hedged

I have done well on #1 at times, especially 2016 Q4 after elections with immediate rotation into even more financials and then IWM; but a bit less so this year with the market outperforming in areas I have not been concentrated in meaning tech and global stocks. I was comfortable with maximum leverage (up to 150%) in Q4 but less so in Q1, and believe 120% was the highest exposure in 2017. But I have been very, very good throughout this site at #3.

Currently 90% given RSX entry which as a position was correct. Per the recent Total market view I mentioned possibilities of taking gains on SMH and yesterday the chance of hedging QQQ. The other choice would be to jump on IWM short if below MarP on Wednesday.

I don't want to be too bearish - the larger trends are still up for stocks. But with VIX above FebP and very likely to open above MarP, I think the correct position is to be less long so that means 70-80%. Hedge on QQQ. Jump on IWM short if below MarP. Wait and see on SMH.

SPY, QQQ and VIX below.