Good Morning,

I’m separating the two posts because many of our clients could care less about the back end, they are focused on the front, so now they don’t have to wait for the back thoughts to read our fundy outlook.

Outrights

No new trades from last week, though the one we flagged, the Q318 SP HL has moved up to the #3 spot.

Where the market despised SP last winter and spring, now it can’t get enough of next summer. We expect this heat rate to get pounded again this winter, but that is a long time away and you’ll need to get passed the autumn Santa Anas. Still, the product is over-priced and the market has already recognized that fact having slipped 400 btus in the last 14 days. More slippage to come, but could also be another rally when those desert winds blow into LA.

On|Off

Our favorite trade last week was buying the NP15 Q418, now the rank on that has slipped 90 places and it’s time to bank the gain:

Maybe there is a bit more juice in it, but doubt it.

Sell Q418 NP15 OnOff

The Q119 SP on/off has moved up 40 spots but we already shorted it and the market has been sideways since – pass. Nothing else reaches out and grabs us, let’s move on.

Rolls

Lots of potential trades, the SP Q218-Q118 HL has moved up the most in the rankings:

Seems a rather sharp move over the last week, one the market is taking a pause and reconsidering. That said, there just isn’t that much heat rate volatility in this roll to warrant tying up var.

Spreads

Holding the #1 spot, for spreads, is the Q3 18 NP-SP HL:

That product wasn’t on the radar screen last week, now its the best spread. With NP cash trading premium, and the gas spread blowing out, it might be a good time to fade this irrational move. Then again, late summer heat could push it back out.

Buy Q318 NP HL, Sell Q318 SP HL

Last week’s #1 spread was shorting the Q417 SP-PV, now the product has tumbled to the #70 spot:

A slight gain, but seems there is more room to go. Pass. Similar story to our other spread trade we shorted, the SP-MidC Q1 LL:

That trade has fallen hard too.

Admin Note: We will be switching to heat rate for ranking. Also see a need to track relative rankings which we’ll add.