As we approach the midpoint of 2009, I thought it would be good to share an analysis of the current market. The first half of the year saw incredible moves, volatility and a potential market bottom. In fact, it contained more action than one typically sees in a decade.

However, if you went to sleep on Dec. 31, 2008, and woke up now, you would see the indices virtually unchanged. The

S&P 500

is virtually flat, the

Dow Jones Industrial Average

is down modestly and the

Nasdaq

is up solidly.

Looking ahead, let's take a look at the bull and bear cases for the S&P 500 to figure out what may be in store for the summer and the rest of the year. (Keep in mind the market should slow down a bit into the Fourth of July long weekend.)

The Bullish Case

I only put the bullish case first because I flipped a coin and the bulls took heads. As you can see on the chart below, the bulls have made tremendous progress but could be getting tired. However, all of June was a rest period, so maybe that summer rally will get kick-started.

Moving averages have converged with price and are really showing a neutral trend. Support continues to lie at 880 on the S&P 500. One thing we know is that if prices are not moving up then they are going down.

The one caveat here is a decline in volatility, which we've seen in the CBOE Volatility Index, or VIX. How so? Declining implied volatility tells us not to expect extreme moves into the future. Basically, prices are adjusting for the decline in volatility, making it safer to come in. I expect this to continue as the volatility trend flattens out. Targets include the 1,000 mark on the S&P 500 and perhaps to 1,050.

The Bearish Case

Bears are concerned here, only because the market has not moved for them. Oh sure, days like Monday are great. But a gap down, then follow-through and that's it? The entire loss was reversed by Wednesday/Thursday. Clearly the bulls did not want to give it up so easily. While there are fundamental arguments against the economy, we'll stick to the charts. Prices have flattened here, and as the quarter winds to a close the window-dressing period is ending.

Volume has not been good on up days, and that lack of participation makes for an uncomfortable situation for bulls. Momentum is driven by price and that is driven by volume. The Moving Average Convergence / Divergence, or MACD, is now at its lowest point since March 24. Is there "something" out there, a catalyst to trigger a selloff? I really don't know, and the charts aren't showing it. The lack of fear is startling given that we're only eight months removed from the Armageddon scenario. Bearish targets include 850 on a failure of 880 and then 800 (50% retracement, high to low).

The ball is in both camps here. The market is the final decider and will tell us which direction the next trend develops. Currently, the charts/technicals have a modest bias to the downside only because they are not looking up, which is a rather weak argument. We're hoping the second half brings us more opportunity to trade both sides of the market profitably.

At the time of publication, Lang had no positions in stocks mentioned.

Bob Lang is a senior analyst and portfolio manager at

BigTrends.com

. He manages subscription services for the firm and writes timely articles about markets, trends and the economy. Lang's articles can be viewed on numerous sites on the Internet. Together with renowned market timer Price Headley, Lang has helped build his supported products into a winning class. He participates in a coaching forum for advanced traders in which he teaches his unique style of trading.