Newsletter 03202016 Final Volume 2 Issue 2

Copyright © 2016 EQS Capital Management LLC, See important disclosure on last page
All rights reserved. 1 www.eqstrading.com
SIGNALS
Last month we gave 6 reasons as to why the
US economy is heading into recession. A lot
can happen in a month and just like that, the
commodity and equity markets have rallied
and “Everything is AWESOME!!!” (For those
of you who have small children, the theme
song from “The Lego Movie” should be stuck
in your heads right about now).
This last month has brought strong rallies and
an auspicious start; “bull” news is slowly over-
taking “bear” news in the media as many pun-
dits have emerged to declare the bottom in oil
and equities is behind us, and predict prosper-
ous times ahead. Before we debunk a 2016 recession
and do an election year “flip-flop,” we need to look at
what, why, and how this rally started, and if everything
really is awesome, or if the rally deserves a sarcastic
“Yeah, right!”
Before we can look ahead, we must look back. What is
it that started the bear market doom and gloom predic-
tion that could
cause the economy
to succumb to a
recession in 2016?
Firstly, the business
cycle is coming to a
close across the
globe as the eco-
nomic engine of
growth is slowing
down. Commodity
demand is soft, and
prices have been in
free fall. Corporate
profits are weak and
industrial production
is contracting across the world and in America. Seem-
ing most important to the American economic outlook is
a paucity of jobs, despite research conveying that
America is nearing “full” employment. (continued on
Page 2)
EVERYTHING IS AWESOME!!!...(RIGHT?)
I N S I D E T H I S I S S U E :
Awesome Continued 2
Precious Metals 4
Crude Oil 5
Natural Gas 7
About EQS 8
Terms and Disclosures 9
EQS T R A D E RE C O M M E N DA T I O N S
T HE SOURC E
FO R CO MMODITY
T RA DING SIG NA LS
Volume 2, Issue 2 March 20, 2016
A Weekly Publication on the Commodity Markets
©
Commodity Symbol
Current
Position
Entry Date Stoploss
Current Position
Return
MTD Return YTD Return
Average 10-Year
Annual Return
Sharpe
Ratio
WTI Crude Oil CLK16 Long 2/23/2016 2.50% 10.93% 16.35% 9.97% 43.54% 1.69
Brent Crude Oil EBK16 Long 2/18/2016 2.50% 7.88% 12.07% 3.44% 50.48% 1.15
Diesel HOJ16 Long 2/19/2016 2.50% 10.89% 11.25% 11.92% 35.98% 1.51
Gasoline RBJ16 Long 2/23/2016 2.50% 9.84% 2.50% 15.58% 53.74% 1.22
Natural Gas NGJ16 Short 12/27/2015 3.00% 54.81% -17.21% 15.32% 71.44% 1.54
Gold GCJ16 Long 3/21/2016 1.00% 0.00% -4.29% 10.84% 31.96% 2.33
Silver SIH16 Short 3/8/2016 1.75% -3.59% 1.27% 14.55% 67.35% 1.26
This performance is simulated using corresponding stop loss recommendations. No leverage used on these results.
Refer to important disclosures on the EQS Trading (www.eqstrading.com) website.

The question then becomes - what has changed? A slew of positive economic indicators surfaced for starters.
GDP was revised upward to 1.0%, exceeding the consensus at 0.4%, the ISM manufacturing indices both came
in above consensus at 49.5 and 53.4, respectively, and the employment indicator, nonfarm payrolls, exceeded
the consensus at 242k vs 190k. This brought on the bulls and commodity prices have had massive rebounds in
a short amount of time. It is not just oil that has been making big gains, but several others, including metals and
agriculture. For example, look at the iron ore chart. In the last 60 days, iron has moved from about $34 to $59,
before falling back to $50 in the blink of an eye. The move in the “sleepy” iron ore market is not a “normal” bull
market rally.
As the old paradoxical riddle goes-what comes first, the chicken or the egg? Industrial metals rally, then energy
rallies, and then the equity markets follows with oscillating swings. Rumors and stimulus seem to imbue the
most influence on large swings in how traders and hedgers are preparing for the future. We constantly preach
that fear and uncertainty drives markets. Despite commodity jumps, there are continued fears in Asia as China
and Japan continue to produce weak economic data, only to be followed by moves of stimulus, or moves due to
the lack of stimulus.
Speaking of fear and uncertainty, recent swings in precious metals bring a unique view to recent volatility in glob-
al markets.
There are many
factors that
swing the gold
and precious
metal market as
currencies rise
and fall, and
Central Banks
enter and exit
stimulus plans,
and monetary
and fiscal policy
drive lending
rates, but this
following chart
seems to defy
logic, and is
worth a second
look.
The Gold "coverage ratio" that shows the total number of gold claims relative to the physical gold that "backs"
potential delivery requests hit a record of 542 ounces earlier in the year in potential paper claims to every ounce
of physical gold. The physical to paper gold story should not in and of itself cause alarm and in no way does it
tell the story of the recession, or a bottom or top of any market, but it expounds on the story that fear and uncer-
tainty are continuing to drive current market conditions.
The boom and bust of business cycles often overshoot and undershoot expectations. As we have previously
reported, the commodity cycle is often a foreshadowing tool of predicting the future tide path of economic health.
We are only a quarter of the way through this New Year, and for some, the tide has brought in fears of reces-
sion, and to some the tide has already washed away those fears.
Uncertainty remains, as Japan and China look to stimulate growth, emerging markets look to reverse hard times,
oil producing countries yearn for higher energy prices, and Europe is faced with the possibility of a “Brexit.”
Recession has not reached America yet, but before you pop “The Lego Movie” in the DVD player and sing along
to the theme song “Everything is AWSOME!!,” know that the world economy has not magically been ameliorated
overnight. In the world of economics, tides come and go rapidly, lifeguards can save your life, but at the end of
the day no one can control the force of the undertow that is waiting to sweep swimmers out to sea.
EVERTHING IS AWESOME!! (CONTINUED)
GDP was revised
upward to 1.0%,
the ISM indices
both came in
above consensus
49.5 and 53.4,
respectively, and
nonfarm payrolls,
exceeded the
consensus at 242k
vs 190k.

The gold bugs are biting and prices are off to an impressive start this year. In fact, the gold
rally so far in 2016, represents the second best start to a year since the 1970’s. Gold has
gained 18.5%, making it the 2016 best-performing investment. The metal touched a one-year
high of $1,287.80 on March 11.
The Fed’s dovish stance to not raise interest rates has once again fueled the gold rally and
consequently, EQS has initiat-
ed another “long” recommen-
dation on gold. The Fed on
Wednesday cut its estimates
for raising interest rates this
year and offered a cautious
outlook on the global economy.
Gold was also buoyed by a
weaker dollar, which fell to its
lowest level since October after
the Fed’s decision. Gold, which is denominated in the U.S. currency, becomes more afforda-
ble to foreign buyers when the dollar declines.
A lower interest rate outlook, a weaker dollar, and concerns of global economic weakness
have many analysts, including JP Morgan and Doubleline Capital, forecasting gold prices
moving higher between $1300 and $1350 per troy ounce. Underpinning this view of the safe
haven trade were fears of China and/or the US heading into a recession. This was com-
pounded by the prospect of negative interest rates becoming more widespread given the
economic woes across the globe.
However, there some analysts taking the other side of the view. Specifically, Goldman
Sachs and Societe Generale-have been sali-
ently outspoken that the recent gold rally is
unsustainable. Improving economic condi-
tions in the US has removed the momentum
of safe haven buying. Additionally, the con-
sensus among analysts are that the Fed will
hike rates one to two more times this year
and several more during 2017. If this plays
out, the US dollar will rise in value and this is
bearish for gold.
The chart pattern reveals that gold prices
broke out of its pennant formation into a de-
scending channel. A break above or below
this channel will indicate gold’s next move.
EQS believes gold is positioned to shine and
will breakout to the upside, clearing $1300
per troy ounce.
GOLD PRICES --POISED TO SHINE
Since the
beginning of the
year, gold has
gained 18.5%,
making it the 2016
best-performing
investment.
Bullish
Bullish Factors Dominate
Pennant
Descending
Channel
Gold Prices

Its amazing how market sentiment can change in just one month. In our previous issue of
Signals, EQS stated there was greater than 50% chance that crude oil could dip below $20/
bbl as the risks of recession in the US were rising and global supplies remained robust. On
February 23rd, the EQS model flipped its positioning from “short” to “long” and so far, our
subscribers have been rewarded handsomely. Crude appears to be breaking out to the up-
side, trading periodically above the psychological $40/bbl barrier and many analysts are
speculating that oil has bottomed.
There are a few reasons for the shift to a bullish stance. Firstly, and most important, is that
monthly oil production is finally showing a year-on-year contraction. Secondly, as mentioned
in the cover story, recent economic indicators for the US have shown notable improvement.
Q4 GDP was revised upward to 1.0%, exceeding the consensus at 0.4%, the ISM manufac-
turing indices both came in above consensus at 49.5 and 53.4, respectively, and the employ-
ment indicator, nonfarm payrolls, exceeded the consensus at 242k vs 190k. Indeed, this
collection of positive data points translates into an improved demand outlook for oil. Conse-
quently, market sentiment swiftly changed with managed money pilling on bullish bets ac-
cording to the CFTC Commitments of Traders reports.
However, EQS does not feel oil prices are out of the woods yet. April and May will be tough
for the oil market in general while facing the spring season when demand is soft and invento-
ries build and consequently feel it’s too soon to eliminate the possibility of a bottom. Our
reluctance to get too excited about this upward trajectory revolves around the supply part of
the equation. While the current price level has caused many higher cost producers to shut in
production, overall production levels in the US and globally are still too elevated despite the
reduction in rig counts. Baker Hughes' weekly count of active rigs drilling for oil or natural
gas in the US hit the lowest level since the data series began at the end of 1948. The de-
cline in rig counts, com-
bined with stubbornly ro-
bust production, is an indi-
cation of how the industry
has become more efficient
at extracting oil and gas out
of the ground. A sustained
recovery in prices beyond
$40/bbl will depend on
whether the robust supply
outlook will continue. As
mentioned in last month’s
Signals, at price levels
above $30/bbl, 97% of the
producers can still operate
wells. With the demand
outlook improved and supply levels remaining high, it will be interesting to see if OPEC
moves beyond the production freeze into an outright cut. This move or further monetary
stimulus in the US could trigger a sustainable rebound in oil prices.
OIL PRICES--NOT OUT OF THE WOODS YET
The EIA revealed
that monthly oil
production is finally
showing a year-on-
year contraction.
Bullish
Bullish Factors Dominate

In early March, Henry Hub spot prices dropped to
their lowest level in 20 years. Temperatures were
warmer than normal in February which contributed
to the downward slide in prices.
Weather continues to signal additional losses for
natural gas in the near term. In its updated fore-
casts, the National Weather Service sees below-
average temperatures spanning much of the Mid-
Atlantic, fringes of the east-north-central U.S., nearly
all of the Southeast and a portion of the Gulf Coast
in the upcoming six- to 10-day period, as above-
average temperatures encompass the bulk of the
West and the edges of the west-central U.S. Aver-
age temperatures are called for a section of Mon-
tana, a majority of the central U.S., all of the North-
east and the balance of the Mid-Atlantic. In the
eight- to 14-day outlook, below-average tempera-
tures exit the U.S. and average temperatures signifi-
cantly shrink in scope to be contained to parts of the
Northeast and Florida, as above-average tempera-
tures overtake the bulk of the country. The domi-
nance of above-average temperatures in the latest
weather projections remain indicative of no
significant need for either cooling or heating
given the time of the year, particularly in the
major consuming Northeast and Midwest.
Tepid demand should reduce dependence on
gas storage and working gas stocks could
finish the heating season near record-high
levels. If withdrawals from storage follow the
five-year average for the remainder of the heat-
ing season, working gas stocks will total 2,336
Bcf on March 31–the traditional end of the
heating season. The record high for stock lev-
els at the end of the heating season occurred
in 2012, when working gas stocks totaled
NATURAL GAS PRICES--NEAR A TURNING POINT
Bearish
2,473 Bcf on March 31, 2012, following a much
warmer-than-normal winter. Working gas stocks
are 727 Bcf above the five-year average and 911
Bcf above last year at this time.
Although the U.S. rig
count has declined to an
all-time low of 480 during
the week of March 11, dry
gas production for the
week of March 9 as re-
ported by the EIA was
0.1% higher than in the
previous week and 2.4%
greater than the level
hitherto from a year-ago.
Ongoing strong produc-
tion, despite a significantly diminished rig count,
alongside a lack of demand should allow for
stranded natural gas to end up in underground
storage facilities.
The good news is that technically speaking, natu-
ral gas prices have recently worked their way
upward to a critical resistance level. The monthly
bar chart of the 12-month futures strip shows that
natural gas prices are currently right at the key
resistance level that it has failed many times be-
fore. Although near-term indicators are bearish,
the market is forward looking and with the poten-
tial of a hot summer, increased natural gas power
generation capacity, and US LNG exports ramp-
ing up, the market could gain enough steam to
breach this level-which could indicate a turning
point for natural gas.
The 12-month
futures strip shows
that natural gas
prices are currently
right at the key
resistance level that
it has failed many
times before.
Natural Gas 12-Month Strip

Services
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 mov-
ing. EQS Commodity Fund imbeds strict risk management principles
through
diversify-
ing its
portfolio
(energy,
metals,
and agri-
culture)
and ac-
tively
managing
stop loss limits.
About EQS
Economic Quantitative Strategy (aka EQS) is an investment and trading
strategy that translates economic data and technical indicators into price
direction for commodities. Because 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.
Further-
more, be-
cause the global economy changes over time, EQS employs dynamic
parameters that evolve as the market changes.
About Us
Management
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.

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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to the particular circumstances or risks of any company, institution, or individual. It is not intend-
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PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. HYPOTHETICAL PERFORMANCE RE-
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PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RE-
SULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HY-
POTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD
CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE,
THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE
OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING
RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO
THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED
FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN AD-
VERSELY AFFECT ACTUAL TRADING RESULTS.
THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THERE-
FORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FI-
NANCIAL CONDITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY
INTEREST TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD
TO LARGE LOSSES AS WELL AS GAINS.
THE REGULATIONS OF THE COMMODITY FUTURES TRADING COMMISSION ("CFTC") REQUIRE THAT
PROSPECTIVE CLIENTS OF A CTA RECEIVE A DISCLOSURE DOCUMENT WHEN THEY ARE SOLICITED TO
ENTER INTO AN AGREEMENT WHEREBY THE CTA WILL DIRECT OR GUIDE THE CLIENT'S COMMODITY
INTEREST TRADING AND THAT CERTAIN RISK FACTORS BE HIGHLIGHTED. YOU MAY REQUEST A COPY
OF THE DISCLOSURE DOCUMENT BY EMAILING EQS. THE CFTC HAS NOT PASSED UPON THE MERITS
OF PARTICIPATING IN THIS TRADING PROGRAM NOR ON THE ADEQUACY OR ACCURACY OF THE DIS-
CLOSURE DOCUMENT. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIG-
NIFICANT ASPECTS OF THE COMMODITY MARKETS. THEREFORE, YOU SHOULD PROCEED DIRECTLY TO
THE DISCLOSURE DOCUMENT AND STUDY IT CAREFULLY TO DETERMINE WHETHER SUCH TRADING IS
APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
EQS CAPITAL LLC IS A CFTC REGISTERED COMMODITY TRADING ADVISOR AND COMMODITY POOL
OPERATOR. PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION
IN CONNECTION WITH POOLS WHOSE PARTICIPANTS ARE LIMITED TO QUALIFIED ELIGIBLE PERSONS,
AN OFFERING MEMORANDUM FOR THIS POOL IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED
WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON
THE MERITS OF PARTICIPATING IN A FUND OR UPON THE ADEQUACY OR ACCURACY OF AN OFFERING
MEMORANDUM. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT RE-
VIEWED OR APPROVED THIS OFFERING OR ANY OFFERING MEMORANDUM FOR THIS FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EX-
CHANGE COMMISSION (THE “SEC”) OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS AS A
PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OF-
FENSE.
T HE SOURC E
FO R CO MMODITY
T RA DING SIG NA LS
TERMS and DISCLOSURES

Newsletter 03202016 Final Volume 2 Issue 2

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