newsletter 070615 final volume 1 issue 2

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

SIGNALS

“NO!” It has been said that

NO is the most powerful word

in the English Language, and

after Sunday’s Referendum,

NO became the most power-

ful word in the Greek Lan-

guage as well. The Greeks

said “NO”! 61% voted against

accepting the latest bailout

package offered to them by

their European creditors, but

this is not the story we care

about. What we care about is

what is going to happen to the

Macroeconomic picture glob-

ally and the many impacts to

market sentiment.

With a population of about 11

million people, Greece is

about the size of New York

City and Houston combined.

With a GDP of about $330

billion it has about the same

GDP as the state of Washing-

ton. As we talked about last

week, the default risk is “only”

$360 Billion and most of it is

spread to the ECB and IMF,

but a drop in the bucket to

the Trillions that is at risk and

propping up China. Probably

like you, EQS does not hold

Greek debt, so why do we

care? We care because it is

an event which can impact

commodities through conta-

gion and market sentiment.

In cards if you know the

“tells” of the guy sitting next

to you, you can develop a

strategy on how to play your

cards. Despite one too many

plastic surgeries Kenny Rog-

ers still knows when to hold’em

and when to fold’em. EQS was

not looking for a Yes or a No from

Greece, but insights as to how the

World will play their cards in reac-

tion to the Greek vote. Conse-

quently, “No” so far is interpreted

as a macro event to flee risky

assets such as oil.

Now, lets shift gears to China. A

consortium of Chinese brokers

announced on Saturday (before

the Greek vote) to inject another

$19 billion into the market and

the government

“NO!”…

A Volatile Week in Energy

• EQS continues to be bear-

ish on natural gas. Weath-er will be the driver as supply remains high with increased injections.

• It is recommended to stay

clear of exposure of oil and products while the market digests Greece and the fall out...

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

“NO!” 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 2 July 6, 2015

A Weekly Publication on the Commodity Markets

TM


(Continued from page 1)

has required China’s mutual

funds to pledge not to sell

equity positions for at least a

year. We know the “tells” of

China as they played their

cards even before Greece

showed their hand. Now we

wait to see how others will

play their cards.

How the “cards” are played

will give us insight on the

health of the economy and we

can model the only things we

care about as traders…Supply

and Demand. Why do we

care about Supply and De-

mand?...Prices.

The Great Recession was

started from similar “small”

beginnings. The debt crisis

was created and snowballed

by reactions to economic

events such as the one that is

occurring in Greece. This is

why we care about it, and

why it is so important.

The next question is what

happens to the Euro? If

Greece exits the EU how will

this shake up all of Europe,

how will that shake up the

World and what will that do

to the supply and demand of

commodities, and thus pric-

es. Again it really does not

matter to us if Greece uses

Euros, the Drachma, or

moon rocks as their reserve

currency, but what matters is

how a default would change

the price of those euros,

dollars, or of course moon

rocks.

For those that are new to

commodity trading, or those

that are old pros, we have to

remember basic principals of

economics. Prices rise and

fall with supply and demand,

and they rise and fall from

EXPECTED future changes of

supply and demand, this is why

we care about Greece. Market

corrections are healthy, and the

Greece issue could be wakeup

call and make Europe stronger.

The market is currently digesting

this not as a panic, but a needed

correction.

The World did not end in 1929,

and it did not end in 2008, and it

will not end now. People will still

need oil, gas, metals, and food.

Expect some “noise” in the mar-

kets, and that is why we trade

with stop loss limits.

There is always money to be

made in volatility and market

turmoil, EQS is here to smooth

those peaks and valleys and

keep you on the right path so like

the “house” you can know the

tells of the guy next to you and

make money when you play your

cards no matter the hand you are

holding.

“NO”….(C O N T . )

There is currently $370

Billion of margin debt

alone in China, which

alone is $10 Billion

more than the total at

risk with a Greek

default!


Weather is and always will be the major driver in

real time natural gas demand. The EIA reported

a 3.2% week-on-week decrease in overall power

burns relative to the prior week, as well as a

0.3% decrease in industrial-sector demand and

1.5% slump in consumption in the residential/

commercial sector.

Pointing to the results of its production survey for

April, the EIA said that U.S. natural gas output is

running nearly 7% higher this year than in 2014,

despite lower prices and reduced drilling com-

pared to a year ago, with continued growth driv-

en by regional shale production concentrated in

the Marcellus area in Pennsylvania, West Virginia

and Ohio.

Thus far in the injection season, net additions to

storage have totaled 1,116 Bcf, versus 1,082

Bcf during the same 13-week period in the prior

year and 897 Bcf on average during the corre-

sponding weeks for the years 2010 to 2014.

EQS remains Bearish on natural gas prices as it

still has not broken out of the long-term re-

sistance line that has been holding since Febru-

ary of 2014.

Bearish fundamentals continue to press

natural gas prices lower...

Bearish


Oil prices have stabilized around $60 per barrel in recent weeks as traders continue to look for direc-

tion. EQS had been Bullish as strengthening economic outlook pointed to a break in the trading band

creating upside potential for oil and the products. The cover story on Greece says it all. Uncertainty put

pressure on the markets last week and despite a strengthening economic outlook, the Bulls were

stopped out several times last week.

The Greece Debt issue shifted EQS’s position from bullish to neutral as oil and product prices slid to a 5

week low. Further exciting the bears, U.S. crude inventories unexpectedly increased, rig counts rose

the first time in 6-months, and OPEC continued to overproduce. In addition, comments from EU foreign

policy chief Mogherini were negative when he said that that diplomats are “close to a deal” to curb

Iran’s nuclear program, which may lead to an increase in Iranian crude exports if economic sanctions

against Iran are reduced.

On the positive side, EIA gasoline supplies fell -1.76 million bbl to a 7-month low of 216.7 million bbl,

more than expectations of -250,000 bbl. However with the 4th of July behind us most of the wholesale

buying for the Summer driving season is behind us as well, so expect wholesale demand to start falling

hard in the coming weeks.

Bearish news is offsetting any positive price action as the recent surge in U.S. crude production is now

at a 43-yr high and record-high U.S. oil inventories are now +24.2% above the 5-yr avg. Furthermore,

Saudi Arabia continues increasing production, and a “peaceful” period in the Middle East as well as a

possible close to Iran talks, and a global slow down due to Greece contagion could further limit upside.

O I L A N D TH E PRO D U C T S . . .W A I T A N D SE E….


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 070615 final volume 1 issue 2

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