Simplistic Relative Valuation and Momentum

Take two stocks - A and B that you, as an investor, that you view as identical (same cash flows and riskiness). Presumably, you'd buy the cheaper one.

Suppose they are the same price and you choose to buy A. If B goes down in value relative to A and you're opinion hasn't changed, you should sell A and buy B.

While, as a friend pointed out, this is simply the relative valuation technique it does offer a reason that stocks chase each other around that has little to do with macroeconomic news. This obvious trading decision would seem to be a likely cause of momentum.