Why is RUT rallying? Experts in...

RUT often ignored by the press, but rarely it is wise to fade it. I personally think it leads all the time and right now it is telling us to buy the dips. Problem is, there haven't been any because both bulls and bears looking for one.

Quote from lsudaytrade:

RUT appears to be leading the market.

all the other indices was red and RUT was up 7pts?
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Quote from nazzdack:

1) In a bear market, you generally expect smaller-cap stocks to fall farther than large-caps.
2) The short-covering rallies of small caps can also be larger too.
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Interesting. I also wonder how much of an effect this had, now that I've been reading the net for a couple of hours trying to puzzle this out. This was published Tues AM and refers to Monday rather than the continued Tues rally:

http://www.marketoracle.co.uk/Article5568.html

The Mother of All Short Squeezes

Deconstructing The Rally – The sharp rally that sprang from the new short sale restrictions has been spiky and, in several ways, very powerful. The impact of the short rule change was evident. As Barron's notes, the 150 stocks with the heaviest short interest rallied a stunning 15%. The stocks with the smallest short positions rose only 2%. That may be a function of existing shorts scrambling to cover to pass the new, belated, scrutiny. That thesis got added weight from a couple of areas. The Merrill Lynch results got mostly panned by several analysts and TV pundits. Nonetheless, the stock closed 24% above its lows for the week. Also, the financial sector ETF rose nearly 25% from the lows.
 
Mother of all short squeezes is right - XLF up 28.5% from a week ago today's lows. IWM up 11% from a week ago today. Crude oil hammered, and the airline index up, what, 65% from last week's lows. I would argue we have seen massive hedge fund liquidations recently. They tend to herd into trades (long crude, short airlines, long crude, short financials, ec) and when they exit things can get screwy.

John Mauldin has nice insights - I get his e-mailed newsletter each week.
 
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