The relative performance of an exchange traded fund tracking Italy’s stock market is a warning that Europe’s debt crisis may get worse.

Earlier this month, I put a spotlight on the sharp pullback that iShares MSCI Italy (NYSEArca: EWI) was experiencing relative to the iShares S&P 500 (NYSEArca: IVV) at the time. [Italy ETF Provides Clues]

I posited that should the pullback be temporary and that ratio leadership persist, animal spirits likely would rise again and manifest themselves through risk-taking and stock buying.

Below is a quick update of the chart. As a reminder, a rising price ratio means the numerator/EWI is outperforming (up more/down less) the denominator/IVV.

As can be seen, the ratio has trended lower and is actually reaching towards its all-time ratio low hit in early September.