Newsletter 081015 Final Volume 1 Issue 7

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

SIGNALS

Apple has lost over $105 billion

in market cap over the last two

weeks. The lost value in market

cap would place Apple greater

than the #62 economy in the

world GDP list, just behind the

country of Morocco. This is why it

makes news when Apple’s stock

goes up or down. With a market

cap of almost ¾ of a trillion dol-

lars, Apple’s market cap is about

the size of the Switzerland’s GDP,

making it #20 on the world list.

In terms of

wealth, if Apple

were a country, it

would be the

55th richest

country in the

world.

Like it or not,

Apple matters,

and the outlook

of the largest

company in the world matters to the economic health and com-

modity demand outlook of the world. However, this week we

have not been waiting on Steve Jobs to come back to life and

turn around Apple—what we were waiting for was the release of

the jobs data from the US Labor Department. (Continued on

Page 2)

All About J-O-B-S

Some good results this week!

*EQS short signals of oil and products were up on average 17.37% last week!

*Gasoline short was up a strong 8.04% last week for a total gain of 16.38% 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 :

Jobs 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 7 August 10, 2015

A Weekly Publication on the Commodity Markets

TM


(Continued from page 1)

American companies added 215,000 jobs in the month of July, while the unemployment rate

remained at 5.3%. The labor force participation rate also remained flat at 62.6%, its lowest level

since 1977.

Economists polled by Reuters expected nonfarm payroll gains of 223,000 in July, with the un-

employment rate at 5.3%. The news was not good, but it was not bad. However what the mar-

ket needed was either a big gain or a big miss, as at least that would have given us some cer-

tainty around the Fed’s next move.

On Tuesday, Dennis Lockhart, the president of the Atlanta Fed, said that he supports a rate hike

at the U.S. central bank's next policy meeting in September. In an interview with the Wall Street

Journal, Lockhart said it would take major weakness in the data to convince him not to move. "I

think there is a high bar right now to not acting, speaking for myself," Lockhart said.

The positive is that jobs are growing and unemployment is stable and actually about where it

should be, but the large concern is that the labor participation rate is only 62.6, which if you

remember back to ECON 101 means that the actual unemployment rate is much higher than

the 5.3% reported as many people have just simply given up hope of finding work and are not

even counted in the jobs data.

As we talked about last week, the Fed is tight lipped, leaving the markets in limbo on exactly

when the first rate hike in over nine years is coming. If there is one thing the market hates, it is

uncertainty. Because the jobs number did not provide any real clarity, it was a huge disappoint-

ment as we still do not have any clear picture of how the Fed will digest the data and what and

when will be their move.

Though the market hates uncertainty, traders can use this uncertainty to their advantage. Vola-

tility creates opportunity, and as EQS teaches our readers, with trading discipline we can make

money no matter what direction the market and the economy moves. It is clear that the market

has finally been waking up to what we have been pointing out for weeks: the world economy is

approaching the end of a business

cycle. The US dollar continues to

have global strength, commodities

are still on a back slide, and now

Wall Street approaches something

that has not happened in over four

years: seven straight down days on

the Dow Jones Industrial average.

It is really all about the jobs. The

jobs data was really a no-win situa-

tion for the market. A big gain and

the Fed was more likely to raise

rates, a big miss and the business

cycle has begun to end and we will

face recession. The data that was

released was neither positive nor

negative, and this could be an even

bigger blow to the markets as it now

throws further uncertainty into an

already fragile world economy.

AL L ABO UT TH E JOBS….(C O N T . )

Dennis Lockhart, the

president of the Atlanta

Fed, on Tuesday said he

supports a rate hike at

the U.S. central bank's

next policy meeting in

September.


Natural gas prices settled higher for the week at $2.80/mmbtu. The EIA reported Thursday morn-

ing that U.S. natural gas stocks increased by 32 billion cubic feet for the week, ending on July 31.

Analysts polled by Bloomberg expected a storage injection (increase) of 40 billion cubic feet. The

five-year average for the week is an increase of around 53 billion cubic feet. The 52-week low for

natural gas futures is $2.59. One year ago, the price for a million BTUs was around $3.87.

Although demand for natural gas is expected to decline as temperatures moderate across much of

the more heavily populated regions of the United States, natural gas will continue to steal market

share from coal, as many coal-fired power plants are retired in 2015 and 2016 due to EPA emission

requirements. Furthermore, we are approaching a time period where seasonal lows occur, as illus-

trated by the attached bar chart. Watch for a turning point between now and September, when

buyers step in to stock

up and hedge for the

upcoming winter season.

As mentioned in previ-

ous issues of Signals,

EQS advises clients to

pay close attention to a

key resistance line in

tact since February

2014 (see attached

chart). A breach in this

line could break loose a

stampede for the bulls!

Stay tuned, it appears a

turning point is near!

Natural Gas: Close to a Turning Point

Bearish

Natural Gas

Natural Gas Spot Price Seasonal Analysis

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Nu

mb

er

of

Occ

ure

nce

s

Annual Low

Annual High

NG Prices

Feb 2014

Aug 2015


Crude and refined product prices declined for the

week, and West Texas Intermediate Crude Oil (WTI)

settled at $43.87/bbl, near a six-year closing low of

$43.46/BBL reached in March. WTI appears to be

testing a

major sup-

port level

that can be

traced back

to 1998

(see at-

tached

chart).

However,

during Fri-

day’s ses-

sion, the

price de-

cline did not

end without

a fight from the bulls. Indeed, buyers were step-

ping in, and ultra-low sulfur diesel was getting the

strongest bid. A weekly report by The U.S. Energy

Information Administration (EIA) and Baker Hughes

revealed that although oil and refined product in-

ventories declined and demand remained strong,

both rig counts and production levels increased,

which helped the bears claw their way to victory.

Friday’s WSJ discussed how rising production was a

theme during the past week as shale drillers report-

ed their second-quarter earnings. Companies are

finding new ways to drill wells faster and cheaper

than before, and many producers are trying to

make up for revenue lost to declining oil prices by

pumping more oil. Specifically, Whiting Petroleum

stated they are setting up the company to run and

grow in a $40/bbl to $50/bbl environment.

IS NOW T H E T I ME T O BU Y CRU DE? NO T S O FA S T . . .

Bearish

Oil & Refined Products

Relating to the cover story, the jobs report

appeared to be strong enough for many ana-

lysts to feel we may see the Fed hike rates in

September. A combination of rate hikes in

the US and monetary easing in Europe are

bullish for the US dollar, which consequently

is bearish for oil. However, although the US

dollar initially rose after the jobs report, the

DXY (an index of the value of the US dollar

relative to a basket of foreign currencies)

struggled to stay above key resistance at

98.3. See the attached chart that shows the

DXY versus the S&P GSCI (Goldman Sachs

Commodity Index) that illustrates the nega-

tive correlation between the US dollar and

commodities.

So, is now the time to buy crude? Watch the

US dollar and US production levels as a ma-

jor change in these indicators are needed to

shift market sentiment for a rebound in oil

prices.

WTI Oil Prices

1998

2009 2015

DXY (US Dollar) vs GSCI (Commodity Index)


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

Newsletter 081015 Final Volume 1 Issue 7

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