MARKET ENDS THE WEEK ON A FLAT NOTE -- BOUNCE IN DOLLAR CAUSES PROFIT-TAKING IN GOLD -- ENERGY AND MATERIAL STOCKS WEAKEN AS WELL -- THE DOW AND S&P 500 CLOSE BACK BELOW 50-DAY AVERAGES

DOLLAR BOUNCE CAUSES PROFIT-TAKING IN GOLD ... After falling sharply all week, the Dollar Index bounced on Friday from potential chart support near its 200-day moving average. That caused profit-taking in gold at a time when bullion was testing its own 200-day average and a resistance line drawn over its July/October highs. Most other commodities sold off as well on Friday, with the expiring nearby oil contract ending well below $40. The February contract, however, is still trading above that potential long-term support level. Energy shares were weak on Friday as were basic material stocks tied to commodities.

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ENERGY AND MATERIAL STOCKS WEAKEN... Two of Friday's weakest sectors were energy and materials. Selling in both groups was based on weaker commodity prices. Chart 3 and 4 show that the Energy SPDR (XLE) and Materials SPDR (XLB) both falling back below their 50-day averages. Their relative strength lines (below charts) have started to weaken as well. That had a negative on market market indexes which also ended the week back below their 50-day lines. So did the Dow and S&P 500.

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DOW AND S&P ARE BACK BELOW 5O-DAY LINES ... Tuesday's 5% jump in the major market averages pushed most of them above their 50-day moving averages for the first time in three months. Chartists (including myself) were encouraged by closes above that important resistance line. Unfortunately, they weren't able to hold it. Charts 5 and 6 show the Dow and S&P 500 ending the week back below their 50-day lines. Chart 7 shows that the Nasdaq Composite never closed above its 50-day line. That pretty much puts us back to where we were a week ago before the Fed's latest action. That also keeps the Dow and the S&P 500 locked in a very short-term trading range formed over the last two weeks.

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HOURLY BARS ... The best way to see those short-term support and resistance levels is by using an "hourly" bar chart as shown in Chart 8. The red line above prices shows short-term overhead resistance around and 918 level for the S&P 500. The green line shows short-term support at 851. Needless to say, a decisive close above 918 is needed to resume the market's recent advance. A close below 851 would signal that the rally has run its course and that the S&P may retest some lower support levels. The major trend for the market remains down at this point which may explain why prices are having such a tough time regaining any traction.

Chart 8