See important disclosures on last page 1 www.eqstrading.com

SIGNALS

We said on Tuesday that

Wednesday was going to

be epic, and luckily we

adverted epic failure and

were rewarded with si-

lence. Nothing new, noth-

ing earth shattering, just

more of the same…stay the

course…and we will take

that as an epic success.

The Fed continues to give us no

real answers from the FOMC

meeting statement that was

released on Wednesday. Sec-

ond quarter GDP expanded at

2.3% and Q1 GDP was revised

up to 0.6% from the previous

0.2% contraction. In the state-

ment, the Fed said the econo-

my was expanding moderately

and that rates would be left

unchanged.

In this case the silence of the

Fed did little to calm foreign or

domestic equities markets and

the commodity slide, as we con-

tinue to be short the energy sec-

tor. The global economy re-

mains on shaky ground and the

United States remains one of the

few bright spots in the world.

(Continued on Page 2)

And the Fed Speaks with Silence…

Some good results this week!

*EQS short signals of oil and prod-ucts were up on average 1.6% last week

*WTI short was up a strong 3.68% last week for a total gain of 11.05% since the short call was made on 7-13-15

**You can achieve these results with discipline and by following the EQS daily trade recommen-dations and using the daily EQS Stop Loss guidance

I N S I D E T H I S I S S U E :

Fed Continued 2

Natural Gas 3

Oil and Products 4

Terms and Disclosures 5

E Q S T R A D E R E C O M M E N D A T I O N S

T H E S O U R C E

F O R C O M M O D I T Y

T R A D I N G S I G N A L S

Volume 1, Issue 6 August 3, 2015

A Weekly Publication on the Commodity Markets

TM

See important disclosures on last page 2 www.eqstrading.com

(Continued from page 1)

Most of Wall Street has now reported strong and or growing earnings helped stock buyback

bonanza that has helped boost earnings per share, however fear of lower future earnings have

equites selling off from the market highs.

We do not have a crystal ball, but it has long been our belief that a rate hike would not have

been appropriate at this time. Though the Fed speaks with silence, they have made it clear

that rates hikes are coming when the data shows that it is appropriate, regardless of whether

the global and domestic economy is truly ready swallow it or not. The federal funds futures mar-

ket is discounting a 40% chance of a rate hike at the next meeting on Sep 16-17, a 52% chance

of a rate hike by the Oct 27-28 meeting, and a 96% chance of a rate hike by the Dec 15-

16 meeting.

There does not seem to be enough that could change in the next few months to boost economic

outlook to call for a September hike. An October rate hike could really put the brakes on holiday

spending which would have a major impact on spending and put a real hit on the Q4 numbers.

The last thing the Fed wants is to start off 2016 behind the 8 ball.

December may shape up to be the best hope of an adverse market

reaction, but no matter how bad main street wants Washington DC

out of the lime light, with the 2016 election year in around the corner,

the closer to election date we get the more front and center a hike

will become. You can bet whatever the Fed does will be the center of

what will likely be the number one priority of candidates and voters…

the economy.

Since the Fed remains silent, we have to use some clues and look

around the world. Though there are millions of variables and data

points, economics boils down to simple common sense. Common

sense tells us that a raise hike is not yet justified. At this point we will

take Wednesday as an epic success! On the flipside, we have noted

that global economic health looks less than excellent. We know that

rates cannot stay low in perpetuity, but if a recession is coming there

will be very fee tools to fight it if rates are at or near zero, and for that

the Fed is running out of time.

TH E FE D SP EA K S….(CO N T . )

The FED "anticipates

that it will be

appropriate to raise the

target range for the Fed

funds rate when it has

seen some further

improvement in the

labor market..."

See important disclosures on last page 3 www.eqstrading.com

Weather and short covering continues to be the

driving factor of any upward price moves that

occurred during the last week. We continue to

stay disciplined with stops, and with this ap-

proach we were still able to bring home a 1.76%

gain for the week from our continued short posi-

tion.

EQS remains bearish as natural gas continues to

be oversupplied. US production is climbing amid

growing dry shale production. This is in light of a

meaningful drop in natural gas rig count. De-

mand has been supportive with record high pow-

er generation. Additionally, industrial demand

growth and coal plant retirements have support-

ed natural gas demand and recently electricity

from natural gas demand surpassed coal for the

first time. However, this has not been enough to

change market sentiment as data from the CFTC

still shows non-commercials hold a large net

short position in the market.

It is beginning to sound like a broken record as

the resistance line that we have been watching

continues to hold.

Natural Gas: Weather and Supply

Bearish

Natural Gas

See important disclosures on last page 4 www.eqstrading.com

Bearish global fundamentals remain center stage

and continue to push prices lower in the oil and

products sector. As the market continues to digest

oil prices, we are seeing more and more extreme

predictions from $20 to $30 oil by the end of the

year, to the flipside of bulls touting $75 to $100 oil.

For now China and Iran look to be the major factors

that could leg oil down further.

As we talked about last week, losses began to ac-

celerate as soon as the $50 psychological barrier

broke. US rig counts have begun to creep higher

again, even with petroleum inventories above 5-

year range and no meaningful drop in US produc-

tion. This could be due to producer locking in hedg-

es when prices were above $60/bbl. Nevertheless,

this rig count increase seems early, given the poor

fundamental picture of high inventories. Further

exasperating the supply glut is OPEC as Saudi pro-

duction is reaching new highs.

Demand is healthy overall, with US refinery capacity

utilization remaining at the high end of the range –

refineries are operating near maximum utilization

because demand for products is high. A caveat is

that demand is near seasonal peak levels so ap-

proaching the fall shoulder months with high inven-

tories is a bearish sign. As the fall refinery mainte-

nance season gets underway we will likely see a

shift back to crude oil stocks building.

HOW I S YOUR CRY S TAL BA LL? $100 O R $20 O IL?

Bearish

Oil & Products

US and global PMIs are above 50 (indicating

economies are expanding), but are showing a

year-on-year decline which is bearish for oil

demand growth. The US dollar is close to a

resistance line in place since mid-march of

this year. Any breakout above this resistance

would have bearish implications for oil. Thus

given the poor macroeconomic and funda-

mental environment of the market, EQS re-

mains bearish.

EQS will be monitoring any meaningful de-

cline in production as well as US dollar weak-

ness to signal a change in price direction.

But for now, it has paid to be short!

See important disclosures on last page 5 www.eqstrading.com

EQS Trading

A Division of EQS Capital Management, LLC

8480 Honeycutt Road, Suite 200

Raleigh, NC 27615

Phone: 919.714.7453

www.EQStrading.com

E-mail: JL@EQScapital.com

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F O R C O M M O D I T Y

T R A D I N G S I G N A L S

TERMS and DISCLOSURES