An examination of the fluid dynamic phenomena that link tip clearance flow to the formation of short length-scale (spike) rotating stall disturbances has been carried out. It is found that the onset of growth in tip clearance blockage characterizes the lowest flow coefficient for which a steady blade passage solution exists. It is also found that this condition leads to the formation of spike disturbances. A scenario and criteria for this tip clearance blockage behavior are proposed based on trailing edge backflow and leading edge spillage to the adjacent blade passage. Both are associated with tip clearance flow and occur below the blade tip. Trailing edge backflow involves tip clearance fluid from adjacent blade passages. The leading edge spillage consists of tip clearance fluid from the local blade passage. These two criteria explain the observed length-scale of spike disturbances. This scenario is consistent with several experimental observations on axial compressor stall inception. The implications of these results on the role of single blade passage computations in stall prediction and on the effectiveness of techniques used to delay stall are also discussed.