S&P 500 signals short-term correction as breadth divergence deepens

In our update from May 7, when the S&P500 (SPX) was trading at around $7,340, we showed that there was late-stage rally risk for the index, as it was wrapping up its final waves for a smaller 3rd wave (gray W-iii in Figure 1 below), or alternatively a final 5th wave.