Look at the one and two year charts that are chosen as examples of companies that at first appear to have similar charts but that are truly different, wherein the longer-term chart shows which company is doing well and which is merely snapping back after a multi-year decline (not shown). Ignore the moving averages lines. Not so different, correct?
Consider the same charts on a 2-year basis, and you will see where money has been attracted. I suspect that this trend is your friend.
The market likes TJX, which has rising sales and earnings in this difficult economic time. The market does not like Pfizer (PFE), which is seeing declining earnings estimates, cut the dividend it pumped up a few years earlier and needed a large acquisition of Wyeth to keep earnings as high as they are (by stripping massive operating costs from the WYE operations).
PFE was down last week. TJX was up. Even the politics favors TJX. Tax and transfer payment policy in the US favors its value-conscious customer. Pfizer got in bed with Team Obama re healthcare reform, but does anyone think brand drug companies are going to be beloved by the powers that be for long?
When looking at stocks, look at charts of various duration. Reasonably valued companies with strong chart patterns make sense most of the time. After massive trending moves as occurred by late 2008/early 2009, whipsaws do occur. Most of the time, bodies in motion tend to stay in motion in the same direction.
Copyright (C) Long Lake LLC 2010