We investigate the existence of overreaction and underreaction in the Portuguese stock market and try to conciliate their simultaneous occurrence. We explore whether Portuguese stock returns are related to return past performance examining a sample that includes all stocks listed in the main market over 16 years. We evaluate whether there is negative autocorrelation in the long run and positive autocorrelation in the short run, and perform several tests to evaluate whether these phenomena stem from overreaction and underreaction by investors. We use several different testing methodologies to evaluate the robustness of the results and assess the validity of alternative hypotheses that have been put forward to explain continuation and reversal patterns in returns. Finally we discuss our findings at the light of the predictions that come out of the theoretical behavioral models that have been developed to explain momentum and reversal in returns. Our results seem to be supportive of the overreaction hypothesis: there is negative correlation in stock returns that is robust to risk and non-risk controls and "value" strategies show superior performance that seems to be associated with extrapolation of past sales performance. As for the short run return pattern, we find weak evidence in support of momentum effects, that persist after controlling for risk, and seem to be associated with an insufficient reaction to earnings announcements surprises. Altogether the two pieces of evidence (continuation followed by reversal in returns) might reflect the dynamic interaction between "news watchers" and "momentum traders" predicted by the behavioral model of Hong and Stein (1999).