The Number 17

Summary

• There were no fewer than 17 scheduled speaking appearances by members of the Federal Reserve in the past week and they alternated in shedding no light on anything.
• Revisions to the GDP and evidence of strengthening consumer participation were not embraced by investors, shedding some doubt on how they might react with improving economic news.
• Six consecutive triple digit moves have left markets little changed as we approach the coming week's Employment Situation Report release that could justify an interest rate increase.

Jim Carrey made what was, by most accounts, a truly putrid move entitled "The Number 23."

At its heart was the "23 enigma," which is the belief that most of life's events and incidents are somehow related to the number 23.

For example, you liked how that new sweater fit on you? The number 23.

Need more proof? The burning of Joan of Arc? The number 23.

While those may be disputable to non-believers, this was certainly the week validating the 17 enigma.

Interestingly, the great director Alfred Hitchcock made a movie entitled "The Number 17," which is regarded among his worst and is rarely ever screened.

This past week, however, the number 17 may have been the key to five days of indecisive trading that saw triple digit moves each day, only to see the S&P 500 end the week with a 0.2% movement.

What the past week gave us were 17 separate occasions during the week when members of the Federal Reserve gave scheduled presentations.

17 is a prime number.

The prime rate is based on the federal funds rate, which is set by the FOMC and their actions or inactions have been ruling markets for months.

Do you really need any more proof than that?

If you do not, that turns out to be very fortunate, but there's not too much doubt that it has become a free for all in terms of getting one's interest rate opinion out in front of as many people as possible.

The week was actually to start with fewer such scheduled speaking engagements, but it must have been difficult to resist the urge to pile on.

By mid-week, as Janet Yellen was presenting some congressional testimony, there may have been some burn-out, as the needle barely moved during her time in front of the august House Services Financial Committee.

Worn out and Federal Reserve weary investors may have taken that opportunity to return to an old friend, oil, for their investing cues.

When Janet Yellen's testimony ended, there were then only 17 hours of trading left for the week.

The ending result was that markets moved back and forth on little real news, although the end of the week's GDP revisions did give some tangible reason to believe that a strengthening consumer could justify an interest rate increase.

However, the market plunged on that day, following the news, casting some doubt on just how accepting investors really are of a December interest rate increase, as they had seemed to be in just the previous week.

As the week did finally come to its end in rally mode we're left wondering what comes next, as there is absolutely no clarity, unless you delve a little bit deeper into the number 17.

What does come next is that 9 Federal Reserve members will be scheduled to speak. I probably don't have to remind anyone that 17 divided by 2 equals 8.5, which has to be rounded up to 9.

With that much clear and little else, the entirety of the coming week may become crystallized as the Employment Situation Report is released at week's end.

Having added to my cash reserves as the previous week came to its end, I continue to not be very anxious to part with any of that cash, but sometimes do find it hard to resist even when there's no rational reason to move forward.

As usual, the week's potential stock selections are classified as being in the Traditional, Double Dip Dividend, Momentum or "PEE" categories.

If you're really looking for a wild ride, perhaps after reading that article about how rollercoasters may help kidney stones to find safe passage, you should also consider ProShares Ultra Silver ETN (AGQ).

I mentioned it a few weeks ago and its recent volatility has been stunning. Its beta, a measure of volatility has certainly picked up greatly in the past 2 months.

That alone should frighten most away from considering a covered position, as should the compromised liquidity of the options and the wide bid - ask ranges.

But 17.

Yes, 17, as the Periodic Table designation for the element silver is Ag, which are the numbers 1 and 7.

17.

And that comes to you from someone whose initials are GA.

That's about as rational of an explanation for why to consider a position. But if you do have the stomach for the wild ride and have discretionary cash, this position could be as unpredictable and profitable as any that you might find. Still, the latter attribute could be a difficult one to attain in the event of a sustained downward movement in the underlying price of silver.

With interest rates, general commodity prices and just about everything else potentially having a bearing on the daily and longer term price of this exchange traded note, its value is eroded with time. It is, therefore, not intended as a longer term holding.

By the same token, as I look at its chart, I see a recent periodicity that may portend a near term move higher.

For that reason, I might consider starting with the sale of put options. But if faced with assignment, I would take the assignment rather than attempting to roll over the puts and dealing with the liquidity and pricing related issues.

At that point, if taking assignment, those shares become a vehicle for selling calls. But I would likely sit on them a bit and only sell those calls on the event of a spike higher, even if only a daily basis spike, rather than waiting for a sustained move higher.

In contrast to the speculative nature of silver, an alternative this week could be JP Morgan Chase (JPM) which is also ex-dividend this week and led by the silver haired Jamie Dimon.

Wells Fargo (WFC) is in the cross hairs of those who could hold its shares back, even as the financial sector may finally be poised to respond to the long anticipated increase in interest rates. JP Morgan could simply be a beneficiary of diverted investment dollars from those having fled Wells Fargo, but may still have a need to have financial sector exposure.

When it comes to dealing with regulatory and legal scrutiny, no one has done it better than JP Morgan and Jamie Dimon in the past decade and now it's someone else's turn to get all of the unwanted attention.

JP Morgan is ex-dividend this week. But, if you are considering a purchase of shares and then selling short dated call options, I would also be mindful of the fact that it reports earnings the following week.

I expect those earnings to be good and further expect positive guidance. B if faced with the need to rollover the short calls, I would likely look to do so with a longer term dated option contract, such as the November 2016 and might then also consider a higher strike price.

As long as there's some thought to considering adding positions in the financial sector, if one wants to be a bit more speculative, there's always Blackstone Group (BX).

While its dividend is usually a moving target in terms of its amount, it continues to be at a very, very attractive yield. That dividend is expected sometime near the end of October, perhaps even coincident with its earnings report.

That may create some challenges in terms of managing the position once the precise date and timing of the ex-dividend date is known. In the meantime, I would consider its purchase and concomitant sale of calls utilizing a short term contract, but continue to be watchful of the announcement of the ex-dividend date if faced with the need to rollover the position.

Finally, the past week saw another of my Marathon Oil (MRO) positions closed. That marked the eighth such closed lot in 2016.

With oil having once again come to influence the market's moves, at least in the past week, as it had done for much of 2016, I'm conflicted about wanting to see Marathon Oil make a move lower.

At this point, with just 3 months left to go for the year, I'm satisfied with my portfolio's absolute and relative performance and wouldn't be happy to see it get eroded in the event oil weakens, as it might if this past week's OPEC agreement falls apart.

However, if it does start to re-approach the $15 level, particularly on a single large downward move, I would be very eager to once again sell puts, even if premature in calling the bottom of that decline.

While there may be downside risk with the energy sector and with Marathon Oil, the option premiums have been very attractive as those shares have repeatedly made quantum leaps and drops, making it a trader's delight.

But you don't have to be an active trader to capitalize on the lack of direction. Those option premiums, and the liquidity in the option market for Marathon Oil contracts, have made it a relatively easy position to maintain, manage and exploit.

Even in my wildest dreams I wouldn't expect to be able to reach 17 closed lots. But if not for Marathon Oil, I'd barely have been in double digits for the number of closed positions on the year, much less triple digits, as in past years.

Traditional Stocks: none

Momentum Stocks: Blackstone, Marathon Oil, ProShares Ultra Silver ETN

Double-Dip Dividend: JP Morgan Chase (10/4 $0.48)

Premiums Enhanced by Earnings: none

Remember, these are just guidelines for the coming week. The above selections may become actionable - most often coupling a share purchase with call option sales or the sale of covered put contracts - in adjustment to and consideration of market movements. The overriding objective is to create a healthy income stream for the week, with reduction of trading risk.

Disclosure: I am/we are long AGQ, MRO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.