Some background: RUT comprises 2000 companies with an average market capitalization of $850m. For SPX, the average company is over $30bn.
These are small companies, much less followed by Wall Street analysts, in turn making them more speculative. The average beta of RUT is about 30% higher than SPX. This is key. When equities are in favor, you should expect RUT to outperform SPX. The reverse is also true when equities fall out of favor.
So is RUT outperformance meaningful to SPX? Not really.
The chart below compares SPX (top panel) to the relative performance of RUT to SPX (bottom panel). When RUT outperforms, the line in the bottom panel rises.
And what we see over the last 10 years is that sometimes SPX rises to new highs when led by RUT (green arrows) and sometimes it does so when RUT lags (red arrows). The relationship is not clean enough to be helpful in understanding SPX better.
What is, in fact, worrisome is that RUT outperformance has often been a precursor to SPX topping out (again, the green arrows). That is essentially the situation today where the level of outperformance is equal to that in mid-2011 before a 20% correction.