Underreaction and overreaction to new information is the cause of price trends. That is, rather than new information being immediately reflected in price, information is priced in more gradually as investors underreact to new information causing price drifts. Or, investors overreact to new information causing prices to adjust too far and then they drift back. 

-Mike Shell

Underreaction:

"In predicting the future, people tend to get anchored by salient past events. Consequently, they underreact."

Shefrin [book]

"The underreaction evidence shows that security prices underreact to news such as earnings announcements. If the news is good, prices keep trending up after the initial positive reaction; if the news is bad, prices keep trending down after the initial negative reaction."

"The momentum evidence briefly described in Chapter 1 is closely related to underreaction, since the positive autocorrelations of returns over relatively short horizons may reflect slow incorporation of news into stock prices."

Overreaction:

"...investors overreact to negative news."

Shefrin (2000)

"De Bondt and Thaler argued that investors overreact to both bad news and good news. Therefore, overreaction leads past losers to become underpriced and past winners to become overpriced."

Shefrin (2000)

"De Bondt and Thaler predicted overreaction based on representativeness. [...] a portfolio of extreme losers does outperform the market. However, a careful inspection of the figure shows that the effect is concentrated in the month of January."

Shefrin (2000) page 42

"Fama (1998a, 1998b) argues that "apparent overreaction of stock prices to information is about as common as underreaction."

Shefrin (2000) page 87

"Rather, what we find is apparent underreaction at short horizons and apparent overreaction at long horizons."

Shefrin (2000) page 87

"What we seem to have is overreaction at very short horizons, say less than one month (Lehmann, 1990), momentum possibly due to underreaction for horizons between three and twelve months (Jegadeesh and Titman 1993) and overreaction for periods longer than one year (De Bondt and Thaler 1985, 1987, 1990)."

Shefrin (2000) page 85

"The overreaction evidence shows that over longer horizons of perhaps three to five years, security prices overreact to consistent patterns of news pointing in the same direction."

Shleifer (2000) page 112