For nearly all of 2016 so far, the narrative has been that if you want to know which way stocks are going, just ask crude. As shown in the intraday chart of the two below, from the opening bell to start the year in January, the S&P 500 and crude oil tracked each other on what seemed like a tick for tick basis. Even on 1/20 in the early afternoon, they both made their low for the month within minutes of each other and rallied for the next week in tandem.
Towards the middle of last week, we began to see what many hoped would be the long anticipated separation between the two as crude oil rallied and stocks sold off after the release of the Fed statement (shaded area in chart). While the divergence (stocks down, crude oil up) was in the opposite direction that most would have hoped, it was a start. Then, towards the end of last week, the divergence actually began to play out in the direction that bulls had hoped with stocks rallying and crude pulling back. Even Monday, equities were able to stage a late afternoon rally as crude oil prices continued to decline from last week's highs.
In what looks like a case of all good things must come to an end, though, Tuesday it was looking like equities and crude oil prices are back on speaking terms and trading in tandem with each other as the S&P 500 was down over 1% and crude oil traded down over 4%. It was fun while it lasted!