Definition
Market overreaction is a behavioral-finance phenomenon in which investors respond to new information with a price move that overshoots the information's actual fundamental significance, typically followed by a partial correction back toward a more justified level as the initial emotional response fades.
In Panel Profits
Overreaction in Panel Profits describes a catalyst-driven price spike that outruns the underlying news' actual durability -- collectors bidding up a key issue on a casting rumor far beyond what the confirmed, produced version of that catalyst would justify. The platform's own anti-pattern guidance on Asset Catalyst warns against assuming catalyst-driven appreciation is permanent for exactly this reason: an overreaction is a leading indicator that a subsequent cooling/consolidation phase is likely.
Comic-market example
A key issue spiking 40% on an unconfirmed casting rumor, then settling back down 15% once the rumor is only partially confirmed, is a textbook overreaction-and-partial-correction pattern.
Common mistakes
Do not label every post-catalyst price decline as an overreaction correction -- a price can also fall because the underlying catalyst news itself proved false or was rescinded, which is a reversal of the catalyst, not a correction of sentiment.