If there's one thing we know about the market, it's that it never ceases to surprise -- there are just too many factors to ever really expect the unexpected. That said, investors themselves are actually quite predictable.
Which is why the notion of patterned human behavior informs a number of different trading strategies.
Take momentum investing, for instance. History has shown us that traders are notoriously slow to react to new information. After good news around a stock breaks, it takes the market a while to incorporate this new intel, and adjust share price accordingly -- meaning its share price could continue to climb.
For this list, we wanted to identify the rebounding stocks that institutional investors have underestimated in 2011. All of these stocks underperformed the S&P 500 during 2010, but they've rebounded in 2011 -- easily beating the benchmark index. In addition, all of these stocks have seen net institutional selling during the current quarter.
Are institutional investors underestimating these rebound stocks? (Click here to access free, interactive tools to analyze these ideas.)
Perhaps more importantly, now that the stock market has pulled back after the U.S. credit downgrade, will big money managers get back into these names?
*Note: Data collected on Sunday, may not reflect price changes since the start of this week.
2. Citizens Republic Bancorp
3. Charming Shoppes
4. Trina Solar
5. Chicos FAS
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.
Kapitall's Eben Esterhuizen does not own shares of any companies mentioned.