Overreaction

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Dictionary Says

Definition of 'Overreaction'

A market hypothesis stating that investors and traders react disproportionately to new information about a given security. This will cause the security's price to change dramatically, so that the price will not fully reflect the security's true value immediately following the event. Typically, the price swing from overreaction is not long lasting, as the stock price will tend to return back to its true value over time.

The overreaction hypothesis is not consistent with the efficient market hypothesis.
Investopedia Says

Investopedia explains 'Overreaction'

For example, suppose that company XYZ releases its annual operating results, which beat analyst expectations by a mere penny per share (generally not a big deal). However, traders and investors subsequently bid up the stock to unprecedented highs. After a couple of days of trading, the stock then falls down to a price just above its price before the earnings release, which represents the stock's current intrinsic value.

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'Overreaction'

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    Behavioral Finance: Key Concepts - Overreaction and Availability Bias. ...

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    ... Article; Comments (0). Hewlett-Packard Primed For An Overreaction Trade.
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  • Overreaction May Make Tech Data Worth A Look

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    ... Article; Comments (0). Overreaction May Make Tech Data Worth A Look. Posted:
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  • Colonial BancGroup Selloff An Overreaction

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    ... Article; Comments (0). Colonial BancGroup Selloff An Overreaction.
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  • 4 Stocks The Insiders Are Buying

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    ... This purchase sends the message that Kenny believes that the pullback in Akami shares
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  • BP Share Price A Steal?

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    ... a living. Market Overreaction At this point, to lose $90 billion in market
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  • Behavioral Finance: Key Concepts - Overconfidence | Investopedia

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    ... Just about every overconfident investor is only a trade away from a very humbling
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  • Behavioral Finance: Conclusion | Investopedia

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    ... action/task. Overreaction occurs when one reacts to a piece of news in a
    way that is greater than actual impact of the news. Prospect ...

  • Viewing The Market As Organized Chaos

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    ... the market. Investor reaction, either overreaction or a lack of reaction,
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  • Behavioral Finance: Introduction | Investopedia

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    ... Behavioral Finance: Key Concepts - Overconfidence; Behavioral Finance: Key
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