"Ominous" Oil-Equity Divergence Looms As WTI Tumbles Under $40 To 4-Month Lows

This is a crucial level as BofA warns, should oil slice through $40/bbl, attention will quickly switch to weak oil, weak Chinese renminbi and weak credit in a repeat of last summer.

Well that escalated quickly... $39.86 hit...

 

Deja vu all over again...

 

Stocks suddenly wake up to the collapse in crude prices...

Who needs oil when you have 'apps' and 'eyeballs'? Bloomberg highlights a chart ZH readers have seen countless time before, an "ominous pattern that preceded the two worst equity selloffs in 2015 is showing up again."

Why is the formation called "ominous"? Because the last two times it emerged, stocks proceeded to tumble

 

But we do note that Oil ETF Shorts are building dangerously once again...

 

Squeeze time?