Implications of Chaos Theory, and A Few Good Looking Charts

In thumbing through good looking charts, experience has taught me that having more evidence is a good thing.  This tends to mean that longer time periods should be given more weight.

Take anything too far and you run into problems. For example aggregations longer than 1 week door a poor job of forecasting the future, especially in individual names.
The reasons are various but I believe the main issue is that over such a long period individual names are susceptible to so many events or a reshuffling of the deck if you will.  That coupled with the volatility of an individual name means that taking positions based on long term price and volume evidence actually bears more risk than medium term price and volume evidence.

Another way to think about this is chaos theory.  That is to say that I can predict the state of the world much more accurately at the end of 4 weeks than I can predict the state of the world at the end of 4 years.

Here are a few charts that are behaving constructively during this market correction (sorted by Mkt Cap).  I don’t have positions in any of these names with the exception of CELG, but am considering short term trades in a few.

CELG, RCL, SWKS, Q, ACM, TQNT, LQ

2014.08.13[12.05.45]_CELG

2014.08.12[17.42.31]_RCL

2014.08.12[17.43.56]_SWKS

2014.08.12[15.57.19]_ACM, ACM, ACM - Charts - 86_____73 Main@thinkorswim [build 1864.10]

2014.08.12[17.42.57]_Q

 

2014.08.12[16.01.00]_TQNT

2014.08.12[17.46.04]_LQ

 

 

Current holdings by weight:

  • MCD from 93.5
  • WFM from 37.75
  • EWG from 28.20
  • GSK from 46.40 after already taking a loss from credit downgrade
  • CELG
  • FB – small position from 73, considering more