Raymond James says gold has broken out, but issues a warning regarding the trading action on NASDAQ and in China.

CRITICAL Upside Resistance Test for NASDAQ
October 17 (King World News) – Here is a portion of what Andrew Adams from Raymond James wrote today:  This long-term chart of the NASDAQ concerns me more than anything else I’ve seen surrounding the recent market decline. I featured it in past weeks to illustrate why the market likely had limited near-term upside while the NASDAQ was knocking up against the upper end of its long-term price channel last month, but now the index has broken down through the clear support that was in place going back to the early 2016 low (lower red line). 

NASDAQ Breaking Down!

Since it actually closed last week beneath this line, we must take the violation seriously for now, especially considering all the NASDAQ has done to this point is bounce back to the lower side of this (now resistance) line. The index REALLY needs to rally back over this line quickly to imply that it was just a false breakdown; otherwise, a drop from here would not be good technical action…

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China Fails to Hold Support
Meanwhile, China’s Shanghai Composite Index, one of the world’s worst performers on the year, continued its decline and now looks poised to fall even further. Support likely doesn’t appear again until closer to 2400.

WARNING: Chinese Stock Market Breaks Major Support Level

Gold Breaks Out!
One of the few assets to actually perform well over the last week was gold, which looks to have broken from the downtrend it was in since April (see chart below).

Gold Breaks Out!

Gold outperformed silver during the move and may be worth a look here, especially if we get more weakness in stocks. Gold doesn’t always move inversely to the stock market, but if the recent pattern holds it might be a good diversifier.

King World News note:  With stock markets weakening across the globe, it is natural for money to flow into the gold market.  The problem is that it is already an extremely tight physical market.  The other problem is the fact that the commercials are the longest the gold market they have been since 2001.  This does not bode well for the massive hedge fund and speculative shorts.

***KWN has now released the powerful audio interview with John Mauldin discussing the gold market, this week’s stock market plunge, how QT will impact major markets, what will trigger the Fed to initiate the next round of QE and much more and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.

ALSO JUST RELEASED: Art Cashin Warns Of Winter Shocker, Plus A Look At The Gold Sector CLICK HERE TO READ.

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