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Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 1 www.eqstrading.com
SIGNALS
Well it is 2015, and
according to “Back to
the Future II,” the
Cubs are going to win
the World Series. Holy
Cow! What do you
know, the Cubs made
the play offs! The
Cubs still have a very
long way to go, and
you can’t bank on
crystals balls and
movies for predicting
the future, as it does-
n’t look like we will all
be driving flying cars
powered by Mr. Fusion by the time the 2015
World Series champ is crowned.
If 1980s movies about time travel can’t
predict the future, then what are we to do as
traders? The first thing is to put the past
behind, Q3 of 2015 is now in the books, and
as they say “past performance is not an
indicatory of future returns.” With that said
let’s look to the future, and see if we can
make sense of what has been happening in
the market and where we go from here.
It is nothing new that cheap commodities
are good for consumers and the American
consumers love to spend as the US econ-
omy remains one of the few bright spots in
the global market. Low gasoline prices
have the US consumer feeling good as they are buy-
ing electronic gadgets (thanks Apple) and automo-
biles (just not VW’s) at near an all-time record clip.
September auto sales numbers were blockbuster
(the Labor Day weekend numbers were counted in
September this
year and they typi-
cally are recorded
in August num-
bers), which gave a
nice boost to Wall
Street and com-
modities.
(continued on Page
2)
BA D I S GOO D , A ND GO O D I S BA D ( T H E M A R K E T I S S A V E D B Y N O T C R E A T I N G J O B S )
Prices hit the Natu-ral Gas price target set on 9-21-15, as NG hit a fresh three-year low on 10-1-15
I N S I D E T H I S I S S U E :
Bad and Good Cont. 2
Oil and Products 3
Natural Gas 4
About EQS 5
Terms and Disclosures 6
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 15 October, 5 2015
A Weekly Publication on the Commodity Markets
©
Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 2 www.eqstrading.com
Despite the nice rally, there was more concerning data and news that came out
which continues to add to the long term bear case. In case you missed our radio
interview we are fed up with the FED! Since we don’t yet know if the Cubs can win
the World Series, let’s shift our predictions to what is going to happen with the FED
and what they will do with interest rates when they meet again on October 27-28th.
The FED typically focuses on infla-
tion and jobs (wages) which came
in well under expectations, and
after the report most of the Street
changed hike expectations until
early 2016. Since the FED made it
known last month that they are
watching economies around the
world and have concerns about the
global economy, we turn back to
Europe and Asia.
We featured Volkswagen in the last
issue of “Signals,” and the diesel
scandal is the last thing that the Germans and thus the European economy want to
discuss as they are still trying to pull out of their weakness that has been propped
up by Central Bankers since the Great Recession. This week the European woes
moved from Germany to London as Swiss based Glencore (and acronym for Global
Energy Commodity Resources) the 10th largest company in the world and one of the
largest producers and marketers of commodities in the world lost a third of its value
as investors hit the panic button about a possible de-
fault. Glencore sprang into action, created some li-
quidity, tidied up their balance sheet, and was able to
rally the stock back to erase the losses, but is still
down about 2/3 for the year.
China will be closed for a week (October 1-7th) for Na-
tional Day, and according to the WSJ investors have
already pulled $40 billion from emerging-market
stocks and bonds in the third quarter in response to
China's effect on their economies. That is the biggest
outflow since the fourth quarter of 2008, during the
height of the financial crisis. Prior to the Chinese holi-
day their PMI numbers were released, and they were
awful! As signs of China's slowdown bleeds to the US
and the rest of the globe it could be seen as the disas-
ter that tips the whole global economy, or it could trigger the next round of global
stimulus.
Not only will the Fed be watching China, but as we have reported Japan now spends
35% of their total Government revue just to service the interest on their debt. Amer-
ica is not far behind, but a major disaster was adverted at the 11th hour when Gov-
ernment shutdown was averted on Oct 1st as politicians were able to kick the can
down the road again so we could keep charging up the debt ceiling.
Only time will tell if “Back to the Future II” is right and the Cubs can win capture the
2015 World Series. Unfortunately we don’t have a DeLorean that travels through
time, but whatever happens there are always opportunities whether markets are
rising or falling, it just helps to know the facts, know the risks, know the rewards,
and put emotions behind and make some money in Q4!
GO O D A N D BA D…(C ON TI N U ED )
As signs of China's
slowdown bleeds to the
US and the rest of the
globe it could be seen as
the disaster that tips the
whole global economy, or
it could trigger the next
round of global
stimulus.
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Well, we have moved from Groundhog Day to Groundhog Week, since we are stuck right back where we
started. Oil remains range bound despite strong bear news, as the equity bulls are just too strong to keep it
from falling.
We have been long term bears
on the commodity sector and oil.
We have been pointing out for
months the bearish hurdles that
the markets must overcome to
keep economies around the
world from slowing down, or
recessing. However, on Monday
the 28th, the EQS system recom-
mended a “long” call on oil and
the products markets, which has
posted some nice gains for EQS
Trading subscribers.
The Consumer Confidence num-
ber helped kick off the rally but
we were cautiously optimistic the
bulls could keep the rally going to
end the month and quarter, but
rallies in equites and the global
market were able to keep oil
from crashing as the EIA inven-
tory gave the bears every reason
to bring the party to an end once
and for all, but the tides were just
not strong enough yet to kill the
bulls.
It looked like the disastrous Jobs
Report that came out on Friday
was going to break the bulls.
Going into the job report oil prices
were up almost 1%, and after the
report was issued prices torpe-
doed down. As the day pro-
gressed the market realized that
that bad jobs data would likely
delay a FED hike until 2016 at
the earliest, and will likely give
more merit to more global stimu-
lus, and with that the bulls again
started buying and were able to
bring prices back over $45 to end
the week.
We continue to remain cautiously bullish. The market will eventually roll over and test the August lows, but
as the bulls work overtime we will enjoy rides up as we get them, and keep tight stops to stay protected
when those lows are retested.
Oil: STILL Range Bound
Oil and Refined Products
EIA inventory gave the
bears every reason to
bring the party to an end
once and for all, but the
tides were just not strong
enough yet to kill the
bulls.
Bullish
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All rights reserved. 4 www.eqstrading.com
NG hit the lowest settlement since June 13, 2012,
as prices reached $2.433 to start the new month
and quarter.
As we reported in Signals back on September
21st, we would be testing the $2.44 April low, and
we kicked off the quarter with prices below that
April low, and hit a new three year low on the sel-
loff.
With an already soft fall
power demand, Hurricane
Joaquin took any hopes of
a rally out of the question
for the week, as cool rainy
weather blanketed the
east coast and put the
brakes on power demand.
The U.S. Energy Informa-
tion Administration said
Thursday morning that
producers added 98 bil-
lion cubic feet of natural
gas to storage in the week
that ended Sept. 25. It
follows a 106-bcf addition
last week, the largest
weekly additions since
early June. The EIA also
reported gas production in
NATU RA L GA S , HOW LOW CA N WE GO?
Bearish
Natural Gas
the continental U.S. was virtually unchanged in
July despite prices that have lingered near that
three-year low all summer before we finally
broke through the low on Thursday. Total with-
drawals were 82.32 billion cubic feet that
month, compared to 82.29 in June. Production
in July was 5.4% above the same period a year
ago.
Consumption
decreased... led by a
15% decline in
natural gas used for
power generation.
Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 5 www.eqstrading.com
Why You Need EQS
From technicals to fundamentals to macroeconomics, analyzing com-
modity markets can be a daunting task. Let EQS do the work for you.
Through its subscription service, EQS Trading provides traders and
hedgers easy to follow trading signals for major commodity futures mar-
kets, including crude oil, natural gas, gold, silver and many others. Now,
strategies used by institutions and hedge funds are at your fingertips.
The subscription service includes both daily trading signals and the
weekly Signals Newsletter, which provides in-depth insight to the com-
modity markets.
EQS Capital Management also offers a commodity hedge fund (EQS
Commodity Fund LLC), which employs the same signals in its subscrip-
tion service in a private placement fund for accredited investors and
institutions. Because EQS uses a “long” and “short” strategy, it is de-
signed to
generate
returns,
regardless
of which
way the
market is
moving.
EQS
Commod-
ity Fund
imbeds strict risk management principles through diversifying its portfolio
(energy, metals, and agriculture) and actively managing stop loss limits.
What is EQS?
Economic Quantitative Strategy (aka EQS) is an investment and trading
strategy that translates economic data and technical indicators into price
direction for
commodi-
ties. Be-
cause of its
quantitative
nature,
EQS has
been rigor-
ously back-
tested with
15 years of
historical
data to
ensure the
strategy works in a variety of market conditions. Furthermore, because
the global economy changes over time, EQS employs dynamic parame-
ters that evolve as the market changes.
About Us
Who is EQS?
Richard C. Rhodes
Mr. Richard C. Rhodes is the President and Founder of EQS Capital
Management LLC. Richard has a Bachelor of Science with honors in
Mechanical Engineering from Texas A&M University and an MBA
from Duke University. He brings almost 25 years of diverse energy
experience, covering all phases of the oil and natural gas value chain
from producer to end-user. Richard is a li-
censed Series 3 CTA (Commodity Trading
Advisor) with the Commodity Futures Trading
Commission and a member of the National
Futures Association.
Richard began his professional career on a
drilling rig in West Texas with Conoco Explo-
ration and Production. Richard continued his
oil and gas career with Koch Industries
(ranked as one of the largest privately-owned companies in the U.S.)
where he worked in midstream, refining, pipeline, and distribution
operations. During his eight years with Koch Industries, Richard be-
gan as an operations engineer and later found his true passion in
trading, which leveraged his professional interests in mathematics
and economics. Richard joined Duke Energy in 2002, where he spent
ten years working in the energy trading department and earned The
Pinnacle Award, the company’s highest honor. Richard then left Duke
Energy to launch EQS Capital Management in 2012.
Jonathan M. Lamb
Mr. Jonathan M. Lamb is the Director of Business Development at
EQS Trading. As a four year varsity hurdler
on the track team at Ball State University,
Jonathan earned Bachelor of Science de-
grees in Risk Management, Insurance, and
Economics, and started working on his PhD
in Economics at North Carolina State Uni-
versity before focusing on business and
trading.
As part of the first wave of Millennials to
join the work force, Jonathan started his
professional career almost 15 year ago,
joining ACES Power Marketing as an Operations Specialist, providing
demand side economics for Co-Op Power Providers before becoming
a Real-Time Electricity Power Trader. He continued his career trading
power for seven years with Progress Energy (now Duke Energy, the
largest utility in the nation) as a Senior Real Time Trader. Jonathan
then opted to become an entrepreneur and started a consulting firm
specializing in finance and economics, owning and running seven
different small businesses before joining EQS in 2015.
Copyright © 2015 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 6 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: [email protected]
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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
TERMS and DISCLOSURES