June has been a roller coaster for both market bulls and bears. This stat tells us all we need to know: The SPX has now logged seven absolute 1% moves for the month, with five trading days still remaining in the month. That may not sound like a lot, but it represents roughly one-quarter of the month still to go, and given the market's recent behavior, it wouldn't be surprising to see several more outsized moves before month-end. The current total of seven is already the most since March (nine). Before that, the last time we saw more than seven absolute 1% moves in a single month was April 2025, when there were 12. That kind of inconsistent price movement has created something we haven't seen in a while: we now have two active chart patterns in play for the S & P 500: one bullish and one bearish: Bull flag – the bullish pattern that has now been active for two months. Diamond reversal – the bearish pattern that triggered Tuesday and is now in motion. Interestingly, both patterns project targets that are roughly 4% away from current levels. Let's start with the bull flag. The bull flag pattern remains firmly in play with an upside target of 7,680. As we've noted numerous times to CappThesis clients, the most constructive aspect of this setup was the immediate extension following the April breakout. That helped pull the SPX close to its upside target by the end of May and, in the process, created a meaningful cushion. That cushion has allowed the index to back and fill while keeping both the pattern and its target intact. More importantly, it has provided room for heightened volatility and even the development of shorter-term bearish patterns without damaging the larger bullish structure. This is exactly what we've seen throughout June, with the market's back-and-forth action taking place above the 7,140-breakout zone. The hope is that this continues, with the bullish case calling for another constructive consolidation to be completed and eventually leveraged. If that occurs, the choppy action of the last few weeks could prove to be nothing more than a healthy breather before the next leg higher begins. The diamond reversal pattern As is clear from the chart, a rare diamond formation took shape over the last few weeks. These patterns can be tricky because, by definition, the price action used to form them is often erratic and volatile. And when a diamond formation appears after a long uptrend, it's often considered a reversal pattern (down). This particular set up was built in part off the very steep uptrend line from the June lows, capturing the sharp bounce over the last two weeks. Given that angle, the trendline likely would have been broken eventually even without a decline as severe as Tuesday's. That said, Tuesday's move was decisive. The SPX gapped below the lower boundary, triggering the pattern and producing a downside target near 7,090. That target will remain in play as long as the index stays below the breakdown zone… With all bearish patterns, we know how quickly price can unravel once selling pressure takes hold. That makes this one particularly important to monitor, especially because its 7,090-downside target sits below the bull flag breakout zone. In other words, reaching that objective would simultaneously invalidate the longer-term bullish flag pattern, making the battle between these two active formations one of the market's most important technical developments. A potential bullish pattern? If the SPX can bounce soon, then Tuesday's decline would establish a new higher low from which to build. By connecting the mid-June high with the action from early June, a clear potential cup-and-handle pattern begins to emerge. There's a lot to keep track of from this perspective, but this is exactly the type of back-and-forth movement and posturing that often follows a strong, one-sided advance like we saw in April and May. After such a powerful rally, it's normal to finally see some profit-taking and a change in character. For now, the market remains in a digestive phase, and it's important to keep all of these potential outcomes in mind as the next move develops. — Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: None All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. 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<small>Source: CNBC</small>
