Thoughts about first heat wave – Buy the rumor sell the fact

  • Often the first heat wave of a year is a chance to buy early as the typical traders seems overestimate the impact of the heat.
  • The overestimate leads to financials being bought up and very responsive to bullish model changes as fast money keeps buying after any increase in the forecast.
  • Ultimately the market is usually well prepared for the first heat wave. The gen fleet is in good condition and back from a long outage season, control areas want to show they are prepared an over committee units.
  • The sell opportunity usually comes just before delivery and maybe signalled by a high volume low price range day at an extreme price
  • These thought do not necessarily transfer to a heat wave later in the season for example September heat


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One thought on “Thoughts about first heat wave – Buy the rumor sell the fact”

  1. Theory played out: Friday before heat wave PJM WH Daily (i.e. Monday June 12) was trading $52-$55.5. Actual was RT $40.84 and DA $41. Next day of heat wave ended up real low with RT averaging $34 as heat dissipated early.

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